Armlea Plc v. The Bank Of Scotland & Anor [2004] ScotCS 132 (04 June 2004)

Armlea Plc v. The Bank Of Scotland & Anor [2004] ScotCS 132 (04 June 2004)

The guarantee is a demand guarantee; only fraud can prevent payment under it. The pursuers do not aver fraud and therefore have no prima facie case for interdict or reduction. The contractual structure and documents support the demand guarantee interpretation, and neither personal bar nor set-off arguments are sufficient to prevent payment.

Citation
[2004] ScotCS 132
Parties
Pursuer: Arnlea Plc; First Defender: The Governor and Company of the Bank of Scotland; Second Defender: Robert Emmett
Jurisdiction
Scotland
Judgment Date
04 June 2004
Procedural Posture
Action of Reduction and Interdict / Motion for Recall of Interim Interdict
Outcome
Recall of interim interdict granted; pursuers' motion refused.
Legal Topics
Demand Guarantees, Performance Bonds, Set Off, Personal Bar, Fraud Exception
Contract Law Banking Law Commercial Law Demand Guarantees Performance Bonds Set Off Personal Bar Fraud Exception

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Parties

Arnlea Plc

Pursuer

The Governor and Company of the Bank of Scotland

First Defender

Robert Emmett

Second Defender

Procedural Posture

Action of Reduction and Interdict / Motion for Recall of Interim Interdict

Legal Issues

  1. 1 Whether the pursuers have a prima facie case for interdict and reduction
  2. 2 Whether a valid demand was made under the guarantee
  3. 3 Whether the guarantee is a demand guarantee

Ratio Decidendi

The guarantee is a demand guarantee; only fraud can prevent payment under it. The pursuers do not aver fraud and therefore have no prima facie case for interdict or reduction. The contractual structure and documents support the demand guarantee interpretation, and neither personal bar nor set-off arguments are sufficient to prevent payment.

Court Disposition

Recall of interim interdict granted; pursuers' motion refused.

Orders

  • Interim interdict recalled
  • No interdict or reduction granted