SANCTITY OF THE ON-DEMAND BOND UPHELD

Thursday, October 03, 2013
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The Supreme Court of Appeal has of late, reaffirmed a long line of cases regarding the nature of on-demand bonds. Such bonds are routinely used in construction contracts as security in favour of the Employer for the due performance of the contractors obligations under the contract. The judgment in this instance concerns Eskom’s decision to make a call on performance bonds which were procured by Hitachi Power Africa pursuant to its construction contract with Eskom. Hitachi on 13 February 2013 sought and was granted an interdict preventing Eskom from doing so until 28 February 2013.

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