Comdel sought recovery of sums due under a performance bond.
Held: Potter LJ discussed the authorities and said: ‘Those authorities are to the effect that it is implicit in the nature of a performance bond that, in the absence of some clear words to a different effect, when the bond is called, there will at some stage in the future be an ‘accounting’ between the parties to the contract of sale in the sense that their rights and obligations will finally be determined at some future date. The bond is a guarantee of due performance; it is not to be treated as representing a pre-estimate of the amount of damages to which the beneficiary may be entitled in respect of the breach of contract giving rise to the right to call for payment under the bond. If the amount of the bond is not enough to satisfy the seller’s claim for damages, the buyer is liable to the seller for damages in excess of the amount of the bond. On the other hand, if the amount of the bond is more than enough to satisfy the seller’s claim for damages, the buyer can recover from the seller the amount of the bond which exceeds the seller’s damages.
It does not appear that there is anything in the words of the contracts of sale in this case to exclude the implication that there would at some stage be an ‘accounting’ between the parties in the sense that their rights and obligations would be finally determined at some future date.’
Judges:
Butler-Sloss LJ, Peter Gibson LJ, Potter LJ
Citations:
[1997] EWCA Civ 925, [1997] 1 Lloyd’s Rep 424, [1997] 1 LLR 424
Links:
Jurisdiction:
England and Wales
Cited by:
Cited – Van Der Merwe and Another v IIG Capital Llc ChD 13-Nov-2007
The parties had entered into a debt factoring agreement, under which repayment was sought of some $30m, and the claimants were said to have guaranteed the loan by the factor to their company. The court was asked whether the guarantors had the same . .
Lists of cited by and citing cases may be incomplete.
Arbitration, Jurisdiction, Contract
Updated: 05 November 2022; Ref: scu.141321
