Reply To: Can a RN cancel the rights of a Bank Guarantee?


You must be careful with the RN. Let the lawyer handle it.

The whole point of the RN is that you offically notificate the bank that the developer is in breach of a contract clause.

What you seek then is to enforce a contractual clause that states that in case of a breach of contract you are entitled to execute your bank guarantee.

A breach of contract would be, for example, If in the contract you agreed with the developer that he had to obtain a BL in a given deadline and once this is due and he has failed to obtain it, he is effectively breaching a contractual clause and you can therefor claim the execution of a BG.

Your lawyer then sends a RN (and probably a few more I’ll add) to force the bank to fulfill its obligation.It takes time for us lawyers because banks are renuant to give away easily there money no matter how right you may be.

There is no catch22 situation, because you do not send them a RN in which you state the contract is null and void. Let your lawyer handle the matter.

Believe me,If the developer falis to obtain a BL in the timeline highlighted in the contract you (= lawyer) may and can enforce a BG. Thre is no problem,it only takes some time, perhaps a few weeks ormore likely 4-6 months.

It really depends on many things and some banks put more of a fight than others thus some execute it swiftly and others is a perfect nightmare for us lawyers (and clients, of course).