Restraining calls on performance bonds

04 Jul 2019

In the recent case of Bintai Kindenko Pte Ltd v Samsung C&T Corp [2019] SGCA 39, the Court of Appeal dismissed an appeal against the discharge of an interim injunction, which had restrained a call on a banker’s guarantee. The Court of Appeal reiterated that the Court will only intervene to prevent a call on a performance guarantee if it can be shown that the call was either fraudulent or unconscionable. These are termed the fraud and unconscionability exceptions.
 
Although parties can agree to contractually exclude the unconscionability exception, the Court of Appeal held that a party that seeks to rely on such an exclusion clause bears the burden of proving that the unconscionability exception has been contractually excluded.
 
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