Parties may contractually limit their right to restrain calls on performance bonds

14 May 2015

This update discusses the recent case of CKR Contract Services Pte Ltd v Asplenium Land Pte Ltd [2015] SGCA 24 where the Singapore Court of Appeal was asked to consider whether a clause in a construction contract between the main contractor and developer was invalid and unenforceable on the basis that it was contrary to public policy as an ouster of the jurisdiction of the court. 

The CA’s decision in the case of CKR Contract Services demonstrates that the Singapore courts will give effect to parties’ contractual agreements.  However, it remains to be seen whether the Singapore courts will go so far as to uphold a clause in a construction contract that excludes fraud as a ground to restrain calls on a performance bond.  If the position under the construction contract is that the employer is entitled to a cash deposit and alternative performance security is to stand in for such a cash deposit, such a clause could be seen as reasonable and held to be enforceable by the courts in Singapore.

To read the update, please click here.