On-demand bond – appropriate language and rebuttal of presumption
In a recent case [1] before the English High Court, a claimant’s application for summary judgment under a Deed of Guarantee and Indemnity was dismissed on the basis that (a) the instrument did not contain language appropriate to a demand bond; (b) as it was a transaction outside the banking context, the presumption, against the interpretation of the instrument as a demand bond had not been rebutted; (c) the respondent has a real prospect of successfully defending the claim. In the process, Mr. Justice Blair considered and reiterated the following principles when construing whether a particular instrument was an on-demand bond. That the difference between secondary liability and primary liability is not in itself decisive That the mere incorporation of a principal debtor clause will not usually suffice in itself to determine the nature of the contract There is no standard nomenclature by which such an instrument can automatically be classified however, and the authorities make it