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 defences to an action as the original debtor. The factor said that the guarantee agreement provided for liability independent of any proof of the undelying debt. The master had decided that the factor had established that it was to be treated on a commercial basis as ‘a performance bond or on demand guarantee issued by a bank’.
Held: The guarantors’ appeal was dismissed. The document was to be construed by the words in it, not the name given to it. It provided for the bank’s certificate to be binding. What was certified was the amount ‘expressed be due’ by the bank, and accordingly was not dependent upon actual liability. Defences which the appellants’ company might have did not affect this liability.
Judges:
Lewison J
Citations:
[2007] EWHC 2631 (Ch)
Links:
Jurisdiction:
England and Wales
Citing:
Cited – Agnew and Kevin James Bearsley v The Commissioner of Inland Revenue, and Official Assignee for the Estate In Bankruptcy of Bruce William Birtwhistle and Mark Leslie Birtwhistle PC 5-Jun-2001
(New Zealand) A charge had been given by a company over its book debts. The charge was expressed to create a fixed charge over debts uncollected when a receiver was appointed, so that on collection they became payable to the bank. Until the receiver . .
Cited – Gold Coast Ltd v Caja De Ahorros Del Mediterraneo and others CA 6-Dec-2001
The banks appealed findings as to their liability to pay out under on-demand guarantees they had given in respect of stage payments for the construction of a ship. It was claimed that the delivery times had not been met, and the builder was in . .
Cited – Heald v O’Connor 1971
A surety for a company’s obligations under a debenture promised: ‘if and whenever the company makes default in payment of any such principal money [to] pay the amount thereof on demand provided that the liability hereunder of the guarantor shall be . .
Cited – General Produce Co v United Bank Ltd 1979
Lloyd J considered a term in a guarantee agreement as follows ‘if and whenever the company makes default in payment of any such principal money [to] pay the amount thereof on demand provided that the liability hereunder of the guarantor shall be as . .
Cited – Marubeni Hong Kong and South China Ltd v Ministry of Finance of Mongolia CA 13-Apr-2005
A letter was written by the Mongolian Ministry of Finance guaranteeing payment for textile plant and machinery to be supplied to a Mongolian company. A letter from the justice minister confirmed the authority of the finance minister to sign the . .
Cited – Bache and Co (London) Ltd v Banque Vernes et Commerciale de Paris SA CA 1973
London Commodity Exchange brokers demanded a bank guarantee before entering into buying and selling transactions on behalf of their customer, a French trading company. The defendants, the trading company’s bankers, gave the guarantee which contained . .
Cited – Trafalgar House Construction (Regions) Ltd v General Surety and Guarantee Co Ltd HL 4-Jul-1995
The main contractors for the construction of a new leisure complex for a borough council entered into a subcontract for the groundworks. The subcontractor and the appellants provided a Bond for 10 percent of the value of the subcontract on condition . .
Cited – Comdel Commodities Limited v Siporex Trade S a CA 5-Feb-1997
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 . .
Cited – Balfour Beatty Civil Engineering Ltd v Technical and General Guarantee Co Ltd CA 1999
A guarantor undertook to pay on first demand on receipt of a certificate: ‘Stating that the Sub-Contractor has failed to fulfil its obligations under the said Sub-Contract and that the sum demanded is due and payable and such demand shall be . .
Cited – Invensys Plc and others v Automotive Sealing Systems Ltd. ComC 8-Nov-2001
The contract provided that a certificate made by an expert was to be conclusive save in the case of manifest error.
Held: The expert’s reasons could be examined in order to determine whether he had made a manifest error. The contract provided . .
Cited by:
Appeal from – IIG Capital llc v Van der Merwe CA 22-May-2008
The directors and holders of the entire share capital of the company appealed against a summary judgement making them personally liable under guarantees given to support a debt factoring arrangement for the company.
Held: The appeal failed. . .
Lists of cited by and citing cases may be incomplete.
Contract
Updated: 11 September 2022; Ref: scu.260355
