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ARTICLE · 15 NOVEMBER 2023

Recourse To Security Based On A Bona Fide Claim

Vincent Young
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It is common for bank guarantees (BGs) to be used as a form of security to secure the performance of a contractor's obligation in a construction contract. A principal's right to have recourse...

AustraliaReal Estate and Construction
Brett Vincent
Brett Vincent
Vince Yap
Vince Yap

Total Construction Pty Ltd v Catholic Healthcare Limited [2023] NSWSC 585

It is common for bank guarantees (BGs) to be used as a form of security to secure the performance of a contractor's obligation in a construction contract. A principal's right to have recourse to the BGs is often governed by the construction contract.

The case of Total Construction Pty Ltd (Contractor) v Catholic Healthcare Limited (Principal) [2023] NSWSC 585 reinforces a principal's right to have recourse to BGs for a 'bona fide claim'. This means that a principal only needs to show an honest and genuine belief that the contractor was in default (unless such allegations were rebutted).

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