BANK GUARANTEE WRONGLY CALLED – WHAT TO DO?
21.09.2017
To secure warranty claims, a retention is often agreed in construction projects. This gives the client the right to retain a certain percentage of the final invoice amount for the duration of the warranty period. To pay off the retention, a bank guarantee is often agreed. This means that the contractor receives the full remuneration for the work without increasing the client's risk. In concrete terms, the contractor's bank undertakes to make payment as soon as the client calls on the bank guarantee, without examining the legal situation. The client only has to claim that the guarantee has occurred in order to oblige the bank to pay out. This means that the client is in the same position as if he still had the retention in his hands.
If the bank guarantee is called up wrongfully, the contractor is entitled to demand it back. The contractor previously had 30 years to do so. According to the most recent decision on this issue (OGH of November 25, 2016, 10 Ob 62/16i), the right to demand the return of a bank guarantee that was wrongfully called up expires within 3 years from the time the bank guarantee was called up. Although this does not lead to the expiration of the right to demand the return, it is no longer enforceable. The contractor is therefore exposed to an extremely unsatisfactory situation in which he is dependent on the voluntary willingness of the employer to repay the guarantee amount.
Due to the short limitation period, which begins to run regardless of whether the contractor is aware of the bank guarantee being called, the contractor is forced to check as quickly as possible whether the bank guarantee was called rightfully or wrongfully. In order to minimize the risk of the claim for repayment becoming time-barred, it is advisable to contractually oblige the client to inform the contractor of the call for the bank guarantee. If the client violates this contractual obligation, this may result in the contractor being entitled to compensation. These only expire within 3 years of knowledge of the damage and the person responsible. Even if such an agreement exists, every contractor is strongly advised to check the call for bank guarantees at regular intervals.