2,049
edits
Changes
From DMC
no edit summary
'''Summary'''
Jonathan Hirst QC and Sara Cockerill QC, instructed by Reed Smith LLP, for the appellant shipyards
In approaching the problem of interpretation which the ‘guarantee’ in this case presented, the court said that it should be guided by the presumption expressed in the following words of Paget's Law of Banking (11th edition):
‘Where an instrument (i) relates to an underlying transaction between the parties in different jurisdictions, (ii) is issued by a Bank, (iii) contains an undertaking to pay “on demand” … and (iv) does not contain clauses excluding or limiting the defences available to a guarantor, it will almost always be construed as a demand guarantee… In construing guarantees it must be remembered that a demand guarantee can hardly avoid making reference to the obligation for whose performance the guarantee is security…"
Paget's presumption had in due course been approved by the Court of Appeal in Caja de Ahorros v Gold Coast Ltd [2002] CLC 397, where the document in that case was held to be an on-demand guarantee although (as in this case) the fourth element of the presumption was absent but the others were present.
