Notwithstanding other provisions of this Agreement, the obligations and liability of the Guarantor under or under such warranty and indemnification shall not be construed in such a way as to impose on the Guarantor obligations and obligations greater than those imposed on AFL under the Main Contract. In the event that the guarantor has or takes guarantees from AFL under this guarantee and compensation, the guarantor undertakes to keep them fiduciary for the beneficiary until all the obligations of the guarantor under or in connection with the main contract are fully fulfilled. The Guarantor, after making a claim under this Agreement, may not demand from AFL sums that may be owed to it by AFL, nor have the benefit of set-off, counter-claim or proof in consideration or as a dividend, composition or payment by AFL, until all amounts due to the Beneficiary under this Agreement or related to or related to the Main Contract: were paid in full. Guarantees are contracts and must therefore contain all the necessary elements of a contract, namely the offer, acceptance, consideration and intention to establish legal relations. In a construction scenario, the guarantor of the parent company is rarely entitled to a payment or direct benefit from the construction contract, so there is a valid argument in favour of a parent company`s inability to provide good consideration for a guarantee it offers. To overcome this difficulty, make sure that a PCG is performed as an instrument because, unlike simple contracts, the instrument does not require that the exchange of counterparties be enforceable. In the purest sense, a PCG is a contractual promise to ensure that the secured party fulfills its obligations under a contract. A guarantee is a contractual agreement that creates a secondary obligation to ensure the performance of a primary obligation. The guarantor`s obligations are subordinated to the underlying contract. Therefore, if we go back to a construction scenario in which a guarantee is given to the contractor, the surety will not have debts greater than those of the contractor in the construction contract. In addition, the warranty terminates when the underlying construction contract is terminated, becomes inoperative or terminates. In view of the conclusion of the main agreement by AFL and the beneficiaries, the guarantor is obliged to provide a guarantee to the beneficiary under the conditions set out in this agreement. Guarantees provided by the parent company (PCG) are often used with respect to construction projects in order to enhance the financial reliability of a contractor.
Given that contractor bankruptcies continue to make headlines and KPMG reports that bankruptcies in the construction industry are growing faster than in other UK sectors, it seems appropriate to question the value that PCGs can bring to projects and to take a closer look at the protection they can offer. Section 4 of the statue of Frauds 1677 requires that the guarantees be written and signed by the guarantor or a person authorized by the guarantor. Interestingly, the courts have adopted a progressive conception of what is written and signed by the guarantor, so an email exchange may be quite sufficient (Golden Ocean Group Ltd -v- Salgaocar Mining Industries PVT Ltd and another [2012] EWCA Civ 265]. . . .
