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When can a Landlord call up a Bank Guarantee?

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Supreme Courts throughout Australia are divided in their opinion regarding the rights of a Landlord to call up a Bank Guarantee.

In a 2013 decision (Otter Group Pty Ltd) the Victorian Court held that a Landlord can call up a Bank Guarantee immediately it claims in good faith that there has been a breach of the Lease.  The New South Wales Supreme Court does not agree with that good faith principal and in that case held that the Bank Guarantee could not be called up in circumstances where the Tenant disputed the issues relating to the breach.

What is abundantly clear is that all Landlords must ensure that the wording of their Leases sufficiently and clearly identify the circumstances where the Landlord is entitled to call up the Bank Guarantee.  Ambiguous or vague wording in your Lease may deny rights of recourse to the Bank Guarantee until after the Tenant has been taken to Court.

We can help you.  Speak to Malcolm McColm for advice on this issue.

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The content published in this Blog is in the form of academic papers and the opinions expressed herein are generalised. The information provided is for educational purposes, not specific legal advice.

The application of any principles referred to can alter from case to case and accordingly you should seek independent legal advice in respect of your individual circumstances.

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