Unconscionability and Performance Bonds

Abstract

This article considers the question of whether, as a matter of legal policy, unconscionability should be adopted by English courts as a ground upon which the court can grant an injunction to restrain a beneficiary of a performance bond from calling on the bond. The May 2012 decision of the Singapore Court of Appeal in BS Mount Sophia Pte Ltd v Join-Aim Pte Ltd [2012] SGCA 28 will be discussed in detail. This decision sheds useful light on the question of whether unconscionability should be adopted by English courts as a ground on which an injunction may be granted to restrain a call on a performance bond. In particular, this article will argue that the fear that excessive uncertainty would arise as a result of the adoption of unconscionability as a ground on which such an injunction can be granted may not be justified. Finally, observations will be made as to the significance of the divergence between Singapore law and English law in this area.