The Doctrine of Strict Compliance in the Context of Demand Guarantees

Abstract

In South African law the required standard of compliance regarding documents presented in terms of commercial letters of credit is unclear. It is presumed that the English law is followed. However, the English law is also not entirely clear as to the required standard of compliance for documents and demands required in terms of demand guarantees. Some English courts have expressed the view that as regards demand guarantees, the doctrine of strict compliance is not as strict as that demanded for letters of credit. In two recent South African cases it was argued that a less strict standard of compliance applies to demand guarantees in South Africa. English authorities were advanced to support this argument. However, this article shows that the exact application of the doctrine of strict compliance to demand guarantees under the English law is neither straightforward nor has it yet been fully established. The article examines these South African cases against the backdrop of the English cases.