‘A bank, ‘the Bank’, is properly called upon by a shipbuilder beneficiary, ‘the Seller’, to make a payment under an on demand performance guarantee issued at the request of the Buyer. The Bank guaranteed due and punctual payment by the Buyer of the second instalment of the price of a vessel under a building contract. The Seller’s demand for payment by, firstly, the Buyer, and secondly, in default, the Bank was made in all good faith. However by the time payment was made by the Bank pursuant to the guarantee, it had been conclusively determined by an arbitration award which had become final and subject to no further challenge that the second instalment had not in fact fallen due. Is the money paid over by the Bank pursuant to its obligation under the guarantee held by the Seller on trust for the Bank, alternatively on trust for the Buyer who would in turn hold the money on trust for the Bank?’
Longmore, Rimer, Tomlinson LJJ
[2013] EWCA Civ 1679, [2014] BLR 119, [2014] CILL 3460, [2014] 1 Lloyd’s Rep 273
Bailii
England and Wales
Banking
Updated: 28 November 2021; Ref: scu.519326
