Principle

CONTRACT LAW – Guarantees – Classification of Performance Bonds – On Demand Bond Distinguished from Guarantee

Area of law
CONTRACT LAW
Court
Supreme Court

Performance bonds can be categorized as: (1) On demand bonds—unconditional obligation to pay on demand, regardless of underlying dispute, autonomous from principal contract. (2) Guarantees (suretyship)—secondary obligation dependent on principal's default, guarantor liable only if principal is liable. Classification is determined by: examining bond contents,…

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