Sri Lankan law, in strict conformity with English common law principles, recognises limited scope for judicial intervention in the enforcement of demand guarantees. Fraud as recognised in common law, provides the basis for restraining the beneficiary calling under the guarantee; both Sri Lankan and English courts have not yet recognised equitable intervention strategies to provide relief against unconscionable conduct on the part of the beneficiary seeking the enforcement of a demand guarantee. This article critically examines the commercial utility of demand guarantees and the need to safeguard the reputation and international standing of financial institutions as the key rationales contributing to the narrow scope of judicial intervention in Sri Lanka. This article argues that these rationales should not stand in circumstances where the beneficiary's conduct calling under the guarantee falls short of fraud but is clearly unconscionable. It also argues that equitable intervention to provide relief against unconscionable conduct in the enforcement of demand guarantees is a significant step towards regulation of unfair trade practices. If regulation does not occur unfair trading practices may promote lower volume, lead to trading declines and depress activity in the guarantee market.