DCW maintains a list of recently-decided court cases involving commercial letters of credit, standby LCs, demand guarantees, and other trade
This month, we sort through some of the big questions shaping LC practice today. Is it time to rewrite UCP
Following his writing in the past two editions of DCW, Robert Parson examines legal developments on sanctions and sanctions clauses that have arisen in courts recently and implications for LC practice.
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To support its work obligations, Chian Teck Realty Pte Ltd. (Subcontractor/Applicant), a Singapore reinforced concrete and precast specialist, applied for and caused Lonpac Insurance Bhd (Guarantor) to issue a SGD 1,123,152.55 performance bond in favour of SDK Consortium (Contractor/Beneficiary), the main contractor for a construction project (and consortium of three engineering companies). The bond value constituted 5% of the subcontract value and no practice rules were mentioned. The subcontract contained a clause stipulating that demands on the bond could not be restrained on the basis of unconscionability.1 (para.3).
A few years into the project,2 the relationship between the parties “deteriorated”. There were disputes regarding both performance of work as well as payment certifications. Subcontractor/Applicant later served a contract termination notice on Contractor/Beneficiary claiming it unilaterally reduced the scope of work and falsely accused Subcontractor/Applicant of performance delays. Contractor/Beneficiary’s first demand for payment was made 29 July 2022. Preceding the demand, Guarantor sent a letter to Contractor/Beneficiary in April 2022 informing that the bond would not be extended. While Contractor/Beneficiary claimed that it did not receive the April notice, it was undisputed that Contractor/Beneficiary received a second notice sent 19 July 2022.
Following his writing in the past two editions of DCW, Robert Parson examines legal developments on sanctions and sanctions clauses that have arisen in courts recently and implications for LC practice.
Contractor-applicant appealed dismissal of complaint against principal of insolvent beneficiary and judgment debtor.
Following his writing in the January 2025 edition of DCW, Robert Parson continues his look at high profile cases by revisiting decisions surfacing from Singapore commodity defaults of recent years.
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