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ARTICLE · 23 JULY 2010

Cashing Bank Guarantees: Not Always An Easy Process

Norton Rose Fulbright Australia
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A recent decision of the Supreme Court of Queensland makes it clear that cashing an unconditional bank guarantee is not always straight forward, depending on the wording of the construction contract which refers to bank guarantees or other security.

AustraliaReal Estate and Construction
Jeffrey Wilson
Jeffrey Wilson
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Walton Construction (Qld) Pty Ltd & Anor v Venture Management Resources International Pty Ltd & Anor [2010] QSC 31

A recent decision of the Supreme Court of Queensland makes it clear that cashing an unconditional bank guarantee is not always straight forward, depending on the wording of the construction contract which refers to bank guarantees or other security.

In the case in question a progress payment certificate was issued by the superintendent certifying that $1.6 million was due to be paid by the contractor to the principal. In arriving at the $1.6 million payment to be made by the contractor to the principal, the principal's estimate of the cost to rectify work claimed to have been defectively performed by the contractor was included along with an amount for liquidated damages.

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