Kwikspace Modular Buildings Limited v Sabodala Mining Company SARL and Another

Kwikspace Modular Buildings Ltd (the contractor) entered into a building contract with Sabodala Mining Company SARL (the principal) for the supply and installation of an accommodation village in Senegal. The contract incorporated Australian Standard General Conditions of Contract (AS 2124–1992) and required the contractor to furnish unconditional performance guarantees issued by Nedbank Ltd. Two such guarantees were issued, payable on first written demand and expressly unconditional. Disputes arose during performance. Sabodala gave notice under clause 5.5 of its intention to convert the performance guarantees into cash. Kwikspace sought an urgent interdict in the South Gauteng High Court to prevent Sabodala from calling up the guarantees, arguing that the underlying contract restricted Sabodala’s right to do so. Interim relief was granted, but final relief was refused. Kwikspace appealed to the Supreme Court of Appeal.

The appeal was dismissed with costs, and the refusal of a final interdict preventing the calling up of the performance guarantees was confirmed.

This case is a leading South African authority on the enforcement of unconditional performance guarantees in construction contracts. It affirms the autonomy and commercial purpose of such guarantees and clarifies that contractual provisions will not lightly be interpreted as restricting a beneficiary’s right to call them up. The judgment aligns South African jurisprudence with Australian authority and reinforces certainty in commercial and construction finance.