Performance Bond Demand Letter for Singapore

Performance Bond Demand Letter Template for Singapore

A Performance Bond Demand Letter is a formal document used in Singapore to make a claim against a performance bond issued by a bank or financial institution. It must comply with Singapore's strict legal requirements, including the principles of unconscionability and fraud exceptions unique to Singapore law. The document serves as a formal demand for payment under the bond terms, typically following a contractor's default or breach of obligations.

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What is a Performance Bond Demand Letter?

The Performance Bond Demand Letter is a critical document in Singapore's construction and commercial landscape, used when a beneficiary needs to call upon a performance bond following a contractor's default or breach of obligations. The letter must be carefully drafted to meet Singapore's specific legal requirements, including adherence to the doctrine of strict compliance and consideration of unconscionability exceptions. It needs to clearly state the demand amount, reference the relevant bond details, and include specific payment instructions. This document is particularly important as Singapore courts have developed unique jurisprudence around performance bonds, including both fraud and unconscionability exceptions to payment.

What sections should be included in a Performance Bond Demand Letter?

1. Addressee Details: Full name and address of the bank/financial institution that issued the bond

2. Bond Reference: Specific reference number and details of the performance bond being called upon

3. Project Reference: Details of the underlying project or contract covered by the performance bond

4. Demand Statement: Clear statement of demand under the performance bond including the specific amount being claimed

5. Default Description: Description of the breach or default that has triggered the bond call

6. Payment Instructions: Specific bank account details and payment instructions for the bond amount

What sections are optional to include in a Performance Bond Demand Letter?

1. Supporting Documentation Reference: Section referencing any attached evidence or documentation of default, included when required by bond terms

2. Prior Correspondence Reference: Reference to previous notices or correspondence regarding the default, included when there has been prior communication

3. Certification Statement: Statement certifying the authenticity of the claim, included when required by specific bond terms

What schedules should be included in a Performance Bond Demand Letter?

1. Original Performance Bond: Copy of the original performance bond document as issued by the bank/financial institution

2. Default Notices: Copies of formal notices previously issued to the contractor regarding the default

3. Supporting Evidence: Compilation of documentation evidencing the contractor's default or breach

4. Authority Documentation: Documentation proving the authority of the signatory to make the demand under the bond

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Singapore

Publisher

Genie AI

Document Type

Demand Letter

Cost

Free to use
Industries

Contract Law Act (Cap. 43): Primary legislation governing contractual relationships and obligations in Singapore, including the formation and enforcement of performance bonds

Banking Act (Cap. 19): Regulates banking institutions in Singapore that issue performance bonds and their obligations in handling such financial instruments

Building and Construction Industry Security of Payment Act (SOPA): Legislation governing payment security in the construction industry, which often involves performance bonds

BS Mount Sophia Case Law: Key Singapore Court of Appeal case [2012] SGCA 28 establishing principles for performance bond claims and enforcement

Bocotra Construction Case Law: Landmark case [1995] SGCA 41 defining the scope of fraud exception in performance bonds

JBE Properties Case Law: Important case [2010] SGCA 46 dealing with unconscionability exception in performance bond calls

Doctrine of Strict Compliance: Legal principle requiring exact compliance with the terms of the performance bond for a valid demand

Principle of Autonomy: Fundamental principle establishing that performance bonds are independent from the underlying contract

Fraud Exception Rule: Legal principle allowing courts to stop payment under a performance bond in cases of established fraud

Unconscionability Exception: Singapore-specific legal principle allowing courts to prevent calls on performance bonds in cases of unconscionable conduct

URDG 758: International Chamber of Commerce Uniform Rules for Demand Guarantees, providing standardized rules for demand guarantees and performance bonds

BCA Guidelines: Building and Construction Authority guidelines specific to performance bonds in construction projects

MAS Regulations: Monetary Authority of Singapore regulations governing banks' issuance and handling of performance bonds

SIA Standard Forms: Singapore Institute of Architects standardized forms and templates for performance bonds in architectural projects

SISV Guidelines: Singapore Institute of Surveyors and Valuers guidelines for performance bonds in surveying and valuation contexts

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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