Legal Analysis on Malaysian Construction Contract: Conditional versus Unconditional Performance Bond

  •  Azizan Supardi    
  •  Hamimah Adnan    
  •  Jamaluddin Yaakob    


unconditional guarantees is still one of the issues relating to performance bond. Therefore, the objective of this research is to determine the phrase(s) in the Performance Bond in a construction contract that determine whether the performance bond is a conditional or unconditional on demand guarantee. In order to achieve this objective, the research was conducted by analyzing relevant court cases. From the findings, it can be concluded that unless an undisputed meaning of the words in the performance bond to make the performance bond to be purely conditional or unconditional 'on-demand' bond, most court interpreted performance bond to be an on-demand performance bond which is only conditional upon the beneficiary asserting the basis of the claim upon the issuer of the bond contending that there has been breach of contract.

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