Injuncting on Demand Bonds

SCL(NZ) Essay Prize Winner 2017

On demand bonds were once intended to operate in a way that made them "as good as cash".  The only exception to this premise being where a party was acting fraudulently in making a call on the bond.  This is not necessarily the case any longer.  Due to developments in case law in the UK and in Australia, courts have opened the doors to injuncting on demand bonds, widening the basis on which an injunction can be obtained, and removing some of the commercial effectiveness of such bonds.  This essay examines what this means going forward, the basis on which injunctions may be sought in New Zealand, and the impacts for banks in these situations