Theoretical justifications for restraining “unconscionable” demands under on-demand guarantees

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Author(s)
Rodrigo, Thanuja
Griffith University Author(s)
Year published
2012
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Whilst English courts have adopted "fraud" on the part of the beneficiary calling under the guarantee as the sole ground upon which the enforcement of on-demand guarantees can be restrained, the Australian courts have adopted "unconscionability" as a separate ground from that of "fraud" for restraining the enforcement of such guarantees. Drawing upon the doctrine of "freedom of contract" and principles of "cost-benefit" in economics this article provides theoretical justifications for the Australian court's divergence from the English law principles in matters restraining demands under on-demand guarantees.Whilst English courts have adopted "fraud" on the part of the beneficiary calling under the guarantee as the sole ground upon which the enforcement of on-demand guarantees can be restrained, the Australian courts have adopted "unconscionability" as a separate ground from that of "fraud" for restraining the enforcement of such guarantees. Drawing upon the doctrine of "freedom of contract" and principles of "cost-benefit" in economics this article provides theoretical justifications for the Australian court's divergence from the English law principles in matters restraining demands under on-demand guarantees.
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Journal Title
Australian Business Law Review
Volume
40
Issue
5
Publisher URI
Copyright Statement
© 2012 Thomson Legal & Regulatory Limited. The attached file is reproduced here in accordance with the copyright policy of the publisher. Please refer to the journal's website for access to the definitive, published version.
Subject
International Trade Law
Accounting, Auditing and Accountability
Law