Abstract
Unlike in many overseas jurisdictions, there is a paucity of South African reported case law dealing with certain instruments of payment and guarantees for payment such as documentary letters of credit and performance guarantees, to mention but two examples of instruments prevalent in the field of payment and financing. For this reason any new case law dealing with either letters of credit or performance guarantees is to be welcomed as it would hopefully not only contribute to our understanding of this area of the law, but also provide an opportunity for comment and reflection. This holds especially true since the International Chamber of Commerce has recently (in July 2007) accepted and introduced a new version of the Uniform Customs and Practices for Documentary Credits (hereinafter “the UCP”): UCP 600. In passing: Apart from the main distinction between direct (three-party) and indirect (four-party) demand guarantees, they (ie, demand guarantees) may also be classified by reference to the phase or part of performance theyare designed to secure, hence the following classification of the different types of demand guarantees: tender guarantee (tender bond); performance guarantee (performance bond); advance payment guarantee (repayment guarantee); retention guarantee; and maintenance guarantee (warranty guarantee). In what follows below the author will use the concept of “guarantee”, being a genericterm, when referring to demand and/or performance guarantees in general. The recent decision in Stefanutti & Bressan (Pty) Ltd v Nedbank Ltd (unreported judgment delivered on 30 July 2008 (case no 5311/2008) by the Durban & Coast Local Division of the High Court (now: KwaZulu-Natal High Court, Durban) is a rare and welcome addition to the rather modest collection of South African decisions dealing with performance guarantees.
Highlights
Unlike in many overseas jurisdictions, there is a paucity of South African reported case law dealing with certain instruments of payment and guarantees for payment such as documentary letters of credit and performance guarantees, to mention but two examples of instruments prevalent in the field of payment and financing. (For an overview of the large body of reported case law in the UK on documentary letters of credit, to mention but one foreign jurisdiction, see Brindle and Cox Law of Bank Payments 3ed (2004) 651 et seq.)
The recent decision in Stefanutti & Bressan (Pty) Ltd v Nedbank Ltd (unreported judgment delivered on 30 July 2008 by the Durban & Coast Local Division of the High Court (: KwaZulu-Natal High Court, Durban) is a rare and welcome addition to the rather modest collection of South African decisions dealing with performance guarantees
The decision in the Stefanutti case merits a number of comments
Summary
Unlike in many overseas jurisdictions, there is a paucity of South African reported case law dealing with certain instruments of payment and guarantees for payment such as documentary letters of credit and performance guarantees, to mention but two examples of instruments prevalent in the field of payment and financing. (For an overview of the large body of reported case law in the UK on documentary letters of credit, to mention but one foreign jurisdiction, see Brindle and Cox Law of Bank Payments 3ed (2004) 651 et seq.). It was sufficient for it to submit the signed version marked “Bank Copy II” In this regard it argued that the letters of amendment did not require that the original of these letters had to be submitted for payment under the guarantee, but merely that “this letter forms an integral part of ... For the same reason it rejected Hillside’s alternative argument based upon an implied term between it and Stefanutti Even if it had raised it timeously, the court held that the fact that Hillside had conceded under cross-examination that it could not be said that Stefanutti withheld the original letter of amendment deliberately, struck at the whole basis for Hillside’s claim to fictional fulfilment (par 35-39). Stefanutti was entitled to an interdict to restrain Nedbank from paying under the guarantee
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