Is an unconditional bank guarantee a valid contract?
Unconditional bank guarantees generally make the beneficiary the sole judge as to whether a breach has taken place or not before enforcing the guarantee. The decision of the beneficiary can be subsequently questioned in proceedings, initiated under the main contract. The sole purpose of the bank guarantee is to ensure instant encashment of the guaranteed amount. Therefore, since the primary concern is this, it has been deemed to be a valid contract.