The enforcement of bank guarantee as a form of security: an examination of the law and practice in Uganda
Loading...
Date
2015-07
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Kampala International University, School of Law
Abstract
The research study looked at the general introduction of banking in Uganda, the back ground, how it evolved from pre-independence to the present date of banking, it also looked at the nature, creation and performance of bank guarantee. The study looked at the guarantee as a form of security, its essential requirement being consideration, agreement and intention to create legal relation, capacity to give a guarantee, the requirement of writing, it looked at different ways of discharging a contract of guarantee that is by payment, release of the principal debtor, by agreement to give time, by material variation of principal contract, by material variation of contract discharge in legal position of parties, discharge by an act or omission by creditor, determination by notice, by death and mental incapacity or bankruptcy. The study investigated on the vitiating elements in a contract of guarantee that is mistake, fraud, misrepresentation and non-discloser, unconscionable transactions, duress, and undue influence, all of these elements can lead the contract of guarantee void or voidable. The research study looked at the analysis of the available remedies to the aggrieved parties and the effect of a bank guarantee under family set up,Report on third party guarantee and family relationships highlight the potential dangers for guarantors that a raise out of misunderstanding the document or the transaction Research confirms that many guarantor sign without an understanding of the nature of the transaction. Guarantors experience both factual and legal misunderstanding about the transaction as a result of misrepresentations, failure to read or understand the documents, lack of business experience and different cultural expectation. The laws in place should be amended so that they state the clear laws that govern the parties under the contract of guarantee and they should spell out the extent of liability for party in a contract of guarantee, a final protective mechanism is to draft the scope of liability of the original guarantee in such a way as to encompass future agreements on substantially different terms. The usual ‘all moneys’ clause is the obvious mechanism. Yet the lender may find considerable resistance from the guarantor to the use of the clause in this context since it is not really a proper description of his initial obligation, which is a guarantee of a specific facility.Finally the research analyzed the recommendations and conclusions of the study.
Description
A thesis Presented to the College of Higher Degrees and Research of Kampala International University Kampala, Uganda in partial fulfillment of the requirements for Award of the Degree Master of Laws (Commercial Law)
Keywords
Bank guarantee, Security, Law