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Court requires issuer to pay out on an on demand bond despite questions over the nature of the contractor’s default (Power Projects Sanayi v Star Assurance)

Published on: 06 November 2024

Table of contents

  • What are the practical implications of this case?
  • What was the background?
  • What did the court decide?
  • Case details

Article summary

Construction analysis: The Commercial Court (Comm) applied a strict interpretation of the terms of an on-demand bond, which in particular prohibited the issuer from resisting payment pending further investigation or enquiry into the circumstances of the claim. This was despite the fact that the contractor on whose behalf the issuer had issued the bond had brought separate proceedings alleging that the employer/beneficiary owed them money for completing works under the contract.

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