<p>In <i>Yuanda v Multiplex</i> <a data-sf-ec-immutable="" href="https://www.lexisnexis.com/uk/lexispsl/construction/document/316762/5Y9P-65M3-GXFD-84WY-00000-00" target="_blank">[2020] EWHC 468 (TCC)</a>, the Technology and Construction Court held
that a bond, based on the ABI Model Form of Guarantee Bond, was a performance bond and not an on demand bond. It also held that an adjudicator’s decision (as to the sub-contractor’s liability to the contractor for delay damages) would
be sufficient to establish liability to pay under the bond.</p><section><h3>What are the practical implications of this case?</h3><p>The case provides an example of the court construing security to determine whether it is an on demand bond or a performance bond. More information on the differences between these two types of bond can be found in Practice Notes: <a data-sf-ec-immutable="" href="https://www.lexisnexis.com/uk/lexispsl/construction/docfromresult/D-WA-A-AVW-AVW-MsSAYWC-UUA-UZEYAAUUW-U-U-AUUU-U-U-U-ACYZUAABYW-ACYBCEWAYW-DABCCUCUA-AUUU-U/5/linkHandler.faces?psldocinfo=Court_construes_bond_based_on_ABI_Model_Form__Yuanda_v_Multiplex_&ps=null&bct=A&homeCsi=412012&A=0.36730383704940217&urlEnc=ISO-8859-1&&dpsi=0OJQ&remotekey1=DOC-ID&remotekey2=0OJQ_151268&service=DOC-ID&origdpsi=0S4D">Performance bonds—construction projects</a> and
<a data-sf-ec-immutable="" href="https://www.lexisnexis.com/uk/lexispsl/construction/docfromresult/D-WA-A-AVW-AVW-MsSAYWC-UUA-UZEYAAUUW-U-U-AUUU-U-U-U-ACYZUAABYW-ACYBCEWAYW-DABCCUCUA-AUUU-U/5/linkHandler.faces?psldocinfo=Court_construes_bond_based_on_ABI_Model_Form__Yuanda_v_Multiplex_&ps=null&bct=A&homeCsi=412012&A=0.36730383704940217&urlEnc=ISO-8859-1&&dpsi=0OJQ&remotekey1=DOC-ID&remotekey2=0OJQ_152491&service=DOC-ID&origdpsi=0S4D">On demand performance bonds—construction projects</a>. The finding that the bond in question was a performance bond was not surprising, and the court had reached the same conclusion in respect of a bond based on the ABI Model Form in <i>Ziggurat v CC International </i><a data-sf-ec-immutable="" href="https://www.lexisnexis.com/uk/lexispsl/construction/document/316762/5R73-9ND1-F0JY-C517-00000-00" target="_blank">[2017] EWHC 3286 (TCC)</a>.</p><p>The ruling also indicates that, where a performance bond requires the amount of damages to be established in accordance with the underlying contract, a valid adjudication decision may well be sufficient for this purpose (depending on the breach in
question).</p></section><h3>What was the background?</h3><p>Multiplex, the main contractor on the ‘One Blackfriars’ tower project in London, appointed Yuanda as its sub-contractor under a JCT Design and Build Sub-Contract 2011. Yuanda provided a bond to Multiplex based on the ABI Model Form of Guarantee
Bond. The sub-contract works were delayed and Multiplex commenced an adjudication against Yuanda seeking to recover substantial liquidated and ascertained damages (LADs) for delay levied against it by Multiplex’s em</p>
Source: LexisNexis Purpose Built
Court construes bond based on ABI Model Form
