Unconscionable Demands Under On-Demand Guarantees: A Case of Wrongful Exploitation
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Unconscionable conduct is well recognised in Singaporean and Australian jurisdictions as a ground for restraining the beneficiary calling under an on-demand guarantee. An on-demand guarantee is provided by an issuer to guarantee that the applicant will meet obligations owed to the beneficiary. When the applicant fails to perform the amount becomes payable by the issuer on demand of the beneficiary. The objective of this article is to examine the meaning of unconscionable conduct in the context of on-demand guarantees. This article examines the equitable doctrines potentially encapsulated in the relevant unconscionability provisions under the Competition and Consumer Act 2010 (Cth) sch 2 and underlying judge-made law, and their relevance to on-demand guarantees. This article argues that only certain categories of unconscionability in equity jurisprudence are appropriate to describe unconscionable demands under on-demand guarantees. Drawing on the theory of exploitation it also argues that unconscionable demands under on-demand guarantees are a case of wrongful exploitation that calls for judicial intervention.
Adelaide Law Review
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Commercial and Contract Law