Kristabel Developments v. Credit Guarantee

Case number: 23125/2014 (2015)

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Kristabel Developments v. Credit Guarantee

South Africa High Court
Case number: 23125/2014 (2015)

Facts

Kristabel Developments (Kristabel) (plaintiff) hired a contractor pursuant to a contract that required the contractor to obtain a performance guarantee for Kristabel’s benefit. Credit Guarantee (CG) (defendant) was the guarantor under the credit guarantee (also known as a payment guarantee) relating to the performance guarantee. To receive payment under the guarantee, Kristabel was required to make a written demand to CG stating that Kristabel canceled the contract due to the contractor’s default; the guarantee also required Kristabel to attach a copy of the cancellation notice to its demand. In April 2014, Kristabel sent a cancellation letter to the contractor, with copies sent to CG and its attorneys. Kristabel also copied CG and its attorneys on emails with the contractor regarding the cancellation. On June 4, Kristabel sent CG a payment-demand letter, advising CG that Kristabel had cancelled the contract and stating that a copy of the cancellation letter was attached. However, Kristabel failed to attach the cancellation letter. CG rejected Kristabel’s demand, arguing that Kristabel’s failure to attach the cancellation letter meant that Kristabel did not strictly comply with the guarantee. Kristabel responded that it sufficiently complied with the guarantee because it canceled the contract before demanding payment and provided CG with the cancellation notice before demanding payment.

Rule of Law

Issue

Holding and Reasoning (Satchwell, J.)

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