South Square Private Law Seminar: 'Control of Independent Contractual Obligations: Injunctive Relief and Judicial Enforcement in Relation to Performance Bonds'

Speaker: Prof Dora Neo, National University of Singapore

One party to a contract may apply for a performance bond for the benefit of the other party, to guarantee the fulfilment of its obligations under the contract. At the applicant’s request, the issuer of the performance bond, usually a financial institution, promises unconditionally to pay the beneficiary of the bond a sum of money upon the beneficiary’s demand. Such bonds are susceptible to abusive calls, as they are independent of the underlying contract and the beneficiary can claim on a bond without having to prove a breach of contract. As an exception to the principle of autonomy, courts in the UK will issue injunctions to restrain fraudulent calls on performance bonds. Courts in Singapore go further, and will issue injunctions to restrain not just fraudulent calls, but also calls that are unconscionable. This has led to a rise in the use of a countervailing contractual term wherein one party promises that it will not apply to court for an injunction to restrain a call on a performance bond by the other party based on the ground of unconscionability.

This presentation explores the extent to which courts should allow parties to enforce their contractual rights in calling on a performance bond on the one hand, and in preventing the other party from applying for an injunction on the other.

This seminar is open to all LLM, MCL and PhD students, Faculty members and Faculty visitors.