The Creditor’s Right for Payment from the Guarantee with respect to the Precise Wording of the Guarantee Deed

(Decision of the Supreme Court from 31 August 2016, file no. 32 Cdo 4752/2014) 

In this case the plaintiff made a claim arising from the Bank Guarantee against the bank. The bank, however, did not proceed with the payment because of a technical error made by the plaintiff in the call for payment (in fact the plaintiff omitted to use one word as oppose to the wording of the Guarantee Deed, that is the word “due”). The case was finally settled by the Supreme Court.

The Supreme Court ruled that the bank had been right in refusing to accept the payment claim made by the plaintiff.

According to the Supreme Court, it is necessary to fulfil the requirements specified in the Guarantee Deed entirely because the bank is not obliged to examine all the aspects of the legal relations between the plaintiff and the Bank Guarantee issuer. The plaintiff’s technical declaration which should have been incorporated within the call for payment (that is the use of the word “due”) was important and its omission caused the call to be ineffective.