Bank guarantees

Bank guarantees are often used as security provided to protect the rights of the principal from default by the contractor.  It is important that contractors understand the legal effects of entering into these arrangements and the potential liabilities that they can cause. 

In general, a principal has the right under the relevant contract to demand payment from the bank pursuant to a bank guarantee at any time, which will trigger a claim for payment by the bank against the party for whom the bank guarantee was issued.  A principal also ordinarily has the right to demand that the contractor top up the funds available under the bank guarantee if a claim has been made by the principal, so as to maintain the level of security it is entitled to under the contract.

Rowe Bristol Lawyers is experienced at providing legal advice and services in relation to bank guarantees, including:

  • providing advice in relation to the terms and legal effect of bank guarantees;
  • providing advice in relation to circumstances in which a party may claim against a bank guarantee;
  • providing advice in relation the client’s rights and liabilities when a claim is made by the client against a third party’s bank guarantee or by a third party against the client’s bank guarantee;
  • providing advice in relation to the resolution of the underlying dispute that led to a claim against a bank guarantee; and
  • representing a party in relation to any negotiation, alternative dispute resolution or legal action that results from an underlying dispute that led to a claim against a bank guarantee.

If you require legal advice in relation to bank guarantees, please contact us to arrange a meeting so that we may consider your specific circumstances.

The above information is provided as general information only and should not be relied upon as legal advice.  The accuracy of this information may have changed from the date when it was published.