On-demand bonds in construction - Revision history

Designing Buildings at 09:45, 15 September 2020

2020-09-15T09:45:23Z

← Older revision		Revision as of 09:45, 15 September 2020
Line 29:		Line 29:
	* [[Wuhan_Guoyu_Logistics_Group_Co_Ltd_%26_Anr_v_Emporiki_Bank_of_Greece_SA\|Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA]]		* [[Wuhan_Guoyu_Logistics_Group_Co_Ltd_%26_Anr_v_Emporiki_Bank_of_Greece_SA\|Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA]]

−	[[Category:Contracts_/_payment]] [[Category:Procurement]]	+	[[Category:DCN_Case_Law]] [[Category:DCN_Definition]] [[Category:DCN_Guidance]] [[Category:Contracts_/_payment]] [[Category:Procurement]]

Designing Buildings at 10:54, 15 March 2020

2020-03-15T10:54:03Z

← Older revision		Revision as of 10:54, 15 March 2020
Line 20:		Line 20:
	If it is at all possible to avoid giving such bonds, they should be resisted where alternative security is available.		If it is at all possible to avoid giving such bonds, they should be resisted where alternative security is available.

−	~~= Find out more =~~	+	= Related articles on Designing Buildings Wiki =
−		+
−	=== Related articles on Designing Buildings Wiki ===	+

	* Aviva Insurance Limited v Hackney Empire Limited.		* Aviva Insurance Limited v Hackney Empire Limited.

Editor at 15:35, 10 January 2018

2018-01-10T15:35:54Z

← Older revision		Revision as of 15:35, 10 January 2018
Line 14:		Line 14:
	It is important to bear in mind that the name of the document can be misleading and does not necessarily accurately describe the nature of document. It is the content of the document that is key.		It is important to bear in mind that the name of the document can be misleading and does not necessarily accurately describe the nature of document. It is the content of the document that is key.

−	In the case of Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA (2013) the buyer agreed to provide a payment guarantee from its bank, Emporiki Bank, to Wuhan (the seller), which guaranteed certain of the buyer’s payment obligations under a shipbuilding contract. An earlier court judgment found that the payment guarantee was actually an on-demand bond. The seller demanded payment of an unpaid instalment from the buyer who refused to pay believing the instalment was not due. Consequently, the seller made a demand, in good faith, under the bond from the defendant for the unpaid instalment of the contract price. The defendant paid the money but a subsequent arbitration found that the instalment was not in fact due so the defendant argued that because of the mistake, the monies paid under the bond should be held on trust for it.	+	In the case of Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA (2013), the buyer agreed to provide a payment guarantee from its bank, Emporiki Bank, to Wuhan (the seller), which guaranteed certain of the buyer’s payment obligations under a shipbuilding contract. An earlier court judgment found that the payment guarantee was actually an on-demand bond. The seller demanded payment of an unpaid instalment from the buyer who refused to pay believing the instalment was not due. Consequently, the seller made a demand, in good faith, under the bond from the defendant for the unpaid instalment of the contract price. The defendant paid the money but a subsequent arbitration found that the instalment was not in fact due so the defendant argued that because of the mistake, the monies paid under the bond should be held on trust for it.

	The Court of Appeal rejected the defendant’s submissions finding that the bond was an autonomous contract, independent of the contract between the buyer and seller, so that when the seller made a call under the bond, monies were immediately payable as an enforceable cause of action had accrued against the defendant pursuant to the terms of the bond.		The Court of Appeal rejected the defendant’s submissions finding that the bond was an autonomous contract, independent of the contract between the buyer and seller, so that when the seller made a call under the bond, monies were immediately payable as an enforceable cause of action had accrued against the defendant pursuant to the terms of the bond.
Line 24:		Line 24:
	=== Related articles on Designing Buildings Wiki ===		=== Related articles on Designing Buildings Wiki ===

−	* Aviva Insurance Limited v Hackney Empire Limited	+	* Aviva Insurance Limited v Hackney Empire Limited.
		+	* Bid bond.
	* Bonds		* Bonds
	* Bonds v guarantees		* Bonds v guarantees
	* Surety.		* Surety.
−	* [[Wuhan_Guoyu_Logistics_Group_Co_Ltd_~~&_Anr_v_Emporiki_Bank_of_Greece_SA~~\|Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA]]	+	* [[Wuhan_Guoyu_Logistics_Group_Co_Ltd_%26_Anr_v_Emporiki_Bank_of_Greece_SA\|Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA]]

	[[Category:Contracts_/_payment]] [[Category:Procurement]]		[[Category:Contracts_/_payment]] [[Category:Procurement]]

Editor at 15:24, 6 January 2017

2017-01-06T15:24:29Z

← Older revision		Revision as of 15:24, 6 January 2017
Line 28:		Line 28:
	* Bonds v guarantees		* Bonds v guarantees
	* Surety.		* Surety.
−	* Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA	+	* [[Wuhan_Guoyu_Logistics_Group_Co_Ltd_&_Anr_v_Emporiki_Bank_of_Greece_SA\|Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA]]

	[[Category:Contracts_/_payment]] [[Category:Procurement]]		[[Category:Contracts_/_payment]] [[Category:Procurement]]

Editor at 15:23, 6 January 2017

2017-01-06T15:23:52Z

← Older revision		Revision as of 15:23, 6 January 2017
Line 1:		Line 1:
−
	Bonds are a means of protection against the non-performance of the contractor. They are an undertaking by a bondsman or surety to make a payment to the client in the event of non-performance of the contractor. The cost of the bond is usually borne by the contractor, albeit, this is likely to be reflected in the contractor's tender price.		Bonds are a means of protection against the non-performance of the contractor. They are an undertaking by a bondsman or surety to make a payment to the client in the event of non-performance of the contractor. The cost of the bond is usually borne by the contractor, albeit, this is likely to be reflected in the contractor's tender price.

Line 7:		Line 6:

	Types of bonds that are may be on-demand bonds include:		Types of bonds that are may be on-demand bonds include:
−	*Advance payment bonds.	+
−	*Off-site materials bonds.	+	* Advance payment bonds.
−	*Bid bonds (or tender bonds).	+	* Off-site materials bonds.
−	*Defects liability bonds.	+	* Bid bonds (or tender bonds).
		+	* Defects liability bonds.

	It is important to bear in mind that the name of the document can be misleading and does not necessarily accurately describe the nature of document. It is the content of the document that is key.		It is important to bear in mind that the name of the document can be misleading and does not necessarily accurately describe the nature of document. It is the content of the document that is key.

−	In the case of Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA (2013) the buyer agreed to provide a payment guarantee from its bank, Emporiki Bank, to Wuhan (the seller), which guaranteed certain of the buyer’s payment obligations under a shipbuilding contract. An earlier court judgment found that the payment guarantee was actually an on-demand bond. The seller demanded payment of an unpaid instalment from the buyer who refused to pay believing the instalment was not due. Consequently, the seller made a demand, in good faith, under the bond from the defendant for the unpaid instalment of the contract price. The defendant paid the money but a subsequent arbitration found that the instalment was not in fact due so the defendant argued that because of the mistake, the monies paid under the bond should be held on trust for it.	+	In the case of Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA (2013) the buyer agreed to provide a payment guarantee from its bank, Emporiki Bank, to Wuhan (the seller), which guaranteed certain of the buyer’s payment obligations under a shipbuilding contract. An earlier court judgment found that the payment guarantee was actually an on-demand bond. The seller demanded payment of an unpaid instalment from the buyer who refused to pay believing the instalment was not due. Consequently, the seller made a demand, in good faith, under the bond from the defendant for the unpaid instalment of the contract price. The defendant paid the money but a subsequent arbitration found that the instalment was not in fact due so the defendant argued that because of the mistake, the monies paid under the bond should be held on trust for it.

	The Court of Appeal rejected the defendant’s submissions finding that the bond was an autonomous contract, independent of the contract between the buyer and seller, so that when the seller made a call under the bond, monies were immediately payable as an enforceable cause of action had accrued against the defendant pursuant to the terms of the bond.		The Court of Appeal rejected the defendant’s submissions finding that the bond was an autonomous contract, independent of the contract between the buyer and seller, so that when the seller made a call under the bond, monies were immediately payable as an enforceable cause of action had accrued against the defendant pursuant to the terms of the bond.
Line 23:		Line 23:

	=== Related articles on Designing Buildings Wiki ===		=== Related articles on Designing Buildings Wiki ===
−	*Aviva Insurance Limited v Hackney Empire Limited
−	*Bonds
−	*Bonds v guarantees
−	*Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA

−	~~[[Category:Contracts_/_payment]]~~	+	* Aviva Insurance Limited v Hackney Empire Limited
−	[[Category:Contracts_/_payment]]	+	* Bonds
−	[[Category:Procurement]]	+	* Bonds v guarantees
		+	* Surety.
		+	* Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA
		+
		+	[[Category:Contracts_/_payment]] [[Category:Procurement]]

Designing Buildings: moved On-demand bonds to On-demand bonds in construction

2015-03-17T07:51:05Z

moved On-demand bonds to On-demand bonds in construction

← Older revision

Revision as of 07:51, 17 March 2015

Designing Buildings at 11:41, 19 March 2014

2014-03-19T11:41:48Z

← Older revision		Revision as of 11:41, 19 March 2014
Line 4:		Line 4:
	Bonds can be 'on demand' or 'conditional', with conditional bonds requiring that the client provides evidence that the contractor has not performed their obligations under the contract and that they have suffered a loss as a consequence.		Bonds can be 'on demand' or 'conditional', with conditional bonds requiring that the client provides evidence that the contractor has not performed their obligations under the contract and that they have suffered a loss as a consequence.

−	With on-demand bonds, the bondsman pays an amount of money set out in the bond immediately on demand in writing without needing to satisfy any preconditions whatsoever (including establishing the contractor’s liability) unless the demand is fraudulent. On demand bonds tend to be common in international projects but are ~~rarely seen~~ in the UK~~. They~~ are generally resisted ~~where possible~~ because of their draconian nature.	+	With on-demand bonds, the bondsman pays an amount of money set out in the bond immediately on demand in writing without needing to satisfy any preconditions whatsoever (including establishing the contractor’s liability) unless the demand is fraudulent. On-demand bonds tend to be common in international projects but are less normal in the UK were they are generally resisted because of their draconian nature.

	Types of bonds that are may be on-demand bonds include:		Types of bonds that are may be on-demand bonds include:
Line 10:		Line 10:
	*Off-site materials bonds.		*Off-site materials bonds.
	*Bid bonds (or tender bonds).		*Bid bonds (or tender bonds).
−	*Defects liability ~~bond (or defects liability demand guarantee)~~.	+	*Defects liability bonds.

	It is important to bear in mind that the name of the document can be misleading and does not necessarily accurately describe the nature of document. It is the content of the document that is key.		It is important to bear in mind that the name of the document can be misleading and does not necessarily accurately describe the nature of document. It is the content of the document that is key.

−	In the case of Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA (2013) the buyer agreed to provide a payment guarantee from its bank, Emporiki Bank, to Wuhan (the seller), which guaranteed certain of the buyer’s payment obligations under ~~the~~ shipbuilding contract. An earlier court judgment found that the payment guarantee was actually an on-demand bond. The seller demanded payment of an unpaid instalment from the buyer who refused to pay believing the instalment was not due. Consequently, the seller made a demand, in good faith, under the bond from the defendant for the unpaid instalment of the contract price. The defendant paid the money but a subsequent arbitration found that the instalment was not in fact due so the defendant argued that because of the mistake, the monies paid under the bond should be held on trust for it.	+	In the case of Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA (2013) the buyer agreed to provide a payment guarantee from its bank, Emporiki Bank, to Wuhan (the seller), which guaranteed certain of the buyer’s payment obligations under a shipbuilding contract. An earlier court judgment found that the payment guarantee was actually an on-demand bond. The seller demanded payment of an unpaid instalment from the buyer who refused to pay believing the instalment was not due. Consequently, the seller made a demand, in good faith, under the bond from the defendant for the unpaid instalment of the contract price. The defendant paid the money but a subsequent arbitration found that the instalment was not in fact due so the defendant argued that because of the mistake, the monies paid under the bond should be held on trust for it.

−	The Court of Appeal rejected the defendant’s submissions finding that the bond was an autonomous contract, independent of the contract between the buyer and seller, so that when the seller made a call under the bond, monies were immediately payable as an enforceable cause of action had accrued against the defendant pursuant to the terms of the bond	+	The Court of Appeal rejected the defendant’s submissions finding that the bond was an autonomous contract, independent of the contract between the buyer and seller, so that when the seller made a call under the bond, monies were immediately payable as an enforceable cause of action had accrued against the defendant pursuant to the terms of the bond.

	If it is at all possible to avoid giving such bonds, they should be resisted where alternative security is available.		If it is at all possible to avoid giving such bonds, they should be resisted where alternative security is available.

Designing Buildings: Created page with " Bonds are a means of protection against the non-performance of the contractor. They are an undertaking by a bondsman or surety to make a payment to the client in the event of no..."

2014-03-19T11:38:37Z

Created page with " Bonds are a means of protection against the non-performance of the contractor. They are an undertaking by a bondsman or surety to make a payment to the client in the event of no..."

New page

Bonds are a means of protection against the non-performance of the contractor. They are an undertaking by a bondsman or surety to make a payment to the client in the event of non-performance of the contractor. The cost of the bond is usually borne by the contractor, albeit, this is likely to be reflected in the contractor's tender price.

Bonds can be 'on demand' or 'conditional', with conditional bonds requiring that the client provides evidence that the contractor has not performed their obligations under the contract and that they have suffered a loss as a consequence.

With on-demand bonds, the bondsman pays an amount of money set out in the bond immediately on demand in writing without needing to satisfy any preconditions whatsoever (including establishing the contractor’s liability) unless the demand is fraudulent. On demand bonds tend to be common in international projects but are rarely seen in the UK. They are generally resisted where possible because of their draconian nature.

Types of bonds that are may be on-demand bonds include:
*Advance payment bonds.
*Off-site materials bonds.
*Bid bonds (or tender bonds).
*Defects liability bond (or defects liability demand guarantee).

It is important to bear in mind that the name of the document can be misleading and does not necessarily accurately describe the nature of document. It is the content of the document that is key.

In the case of Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA (2013) the buyer agreed to provide a payment guarantee from its bank, Emporiki Bank, to Wuhan (the seller), which guaranteed certain of the buyer’s payment obligations under the shipbuilding contract. An earlier court judgment found that the payment guarantee was actually an on-demand bond. The seller demanded payment of an unpaid instalment from the buyer who refused to pay believing the instalment was not due. Consequently, the seller made a demand, in good faith, under the bond from the defendant for the unpaid instalment of the contract price. The defendant paid the money but a subsequent arbitration found that the instalment was not in fact due so the defendant argued that because of the mistake, the monies paid under the bond should be held on trust for it.

The Court of Appeal rejected the defendant’s submissions finding that the bond was an autonomous contract, independent of the contract between the buyer and seller, so that when the seller made a call under the bond, monies were immediately payable as an enforceable cause of action had accrued against the defendant pursuant to the terms of the bond

If it is at all possible to avoid giving such bonds, they should be resisted where alternative security is available.

= Find out more =

=== Related articles on Designing Buildings Wiki ===
*Aviva Insurance Limited v Hackney Empire Limited
*Bonds
*Bonds v guarantees
*Wuhan Guoyu Logistics Group Co Ltd & Anr v Emporiki Bank of Greece SA

[[Category:Contracts_/_payment]]
[[Category:Contracts_/_payment]]
[[Category:Procurement]]