Lloyd's Maritime and Commercial Law Quarterly
THE COMPENSATED SURETY
Tricontinental Corp. Ltd. v. HDFI Ltd.
Corumo Holdings Pty. Ltd. v. C. Itoh
Both the common law and equity have treated the surety with especial tenderness; the contract is, so it is said, strictissimi iuris. This view gained favour at a time when the surety was inevitably someone who, moved by family or other ties, gratuitously intervened to support the borrower. Discussion in two recent Australian cases has suggested that, in contrast with a private surety, a person or company undertaking the obligations of suretyship for reward ought to be treated with less compassion and punctilio.
A “compensated surety” is one who is “in business of providing guarantees for reward as a commercial undertaking upon an assessment of the business risk involved”.1 The notion that such a surety is not entitled to rely upon rights strictissimi iuris which would otherwise operate to protect him has been advanced by Kirby, P., of the New South Wales Court of Appeal in Tricontinental Corp. Ltd. v.
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