1 In construction contracts, on-demand guarantees or unconditional performance bonds are a means of guaranteeing the performance of the contractor to its employer. 

2 On-demand guarantees are similar to letters of credit or promissory notes payable on demand.

3 In Lombard v Landmark & Others  the following was held:

“… The guarantee creates an obligation to pay upon the happening of an event. …The guarantee was to protect the Academy in the event of default by Landmark and it is to the guarantee that one should look to determine the rights and obligations of the Academy and Lombard.”

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Written by Hendrik Markram (B.Eng (Civil), LLB), Director, Markram Incorporated Attorneys