Demand guarantee is widely used in international construction contracts and ship building contracts. However, if the claim guarantee is abused, it will hurt the debtor's liquidity and credit, while depriving the beneficiary of the demand guarantee's rights will also hurt the beneficiary's liquidity. There are many cases in which the law on compliance with construction contracts and demand guarantees is made into English law or the law of English law countries, so it is necessary to review the case and the development of legal principles. We examine the use cases of demand guarantees in international construction and review the development of British and British law-based countries, especially Singapore, on the requirements for demand guarantees, the independent abstractness of demand guarantees and their exceptions, the parties to the prohibition of payment to demand guarantees, and the requirements for the prohibition of payment to demand guarantees. It is necessary to fully understand and cope with the obligations of the right to comply with the law, mainly from the standpoint of a construction company or a shipbuilding company that is a client of a demand guarantee, and that the beneficiary or guarantee bank shall be subject to a payment ban or provisional disposition on the beneficiary or guarantee bank upon claim of the deposit.
Unconscionable conduct is well recognized 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.
Since Singapore Court of Appeal tends to recognized the exclusion clauses of the doctrine of unconscionability from the restriction of the demand guarantee calling, the contractor should allow the doctrine of unconscionability as limited as possible for those who are the beneficiary of the demand guarantee.