1. The terms ‘guarantee’ and ‘security’ are used in JBCC® agreements, essentially with the same meaning – traditionally in South Africa the term ‘guarantee’ has been used compared to ‘security’ in international contract forms
  2. SA Concise Oxford Dictionary: Security: A thing deposited or pledged as guarantee of fulfillment of an undertaking or repayment of a loan forfeited in case of default.

Securities… broadly fall in two categories:

  • ‘on demand’ ‘unconditional’ guarantees that bind the issuer as primary obligor (sometimes referred to as a ‘call bond’)
  • ‘conditional or surety-ship’ type guarantees under which the issuer is accessory to the obligations of the contractor

English Law held that an ‘unconditional on demand bond’ is autonomous of the main agreement – thus the contractorcan not obtain an interdict preventing the employer demanding payment – except in the case of fraud