L.B. Finance Ltd v. Manchanayake – sllr 2000 volume 2 page 142

In the case between L. B. Finance Ltd (Plaintiff) and Manchanayake (Defendant), the court addressed the scope and activation of a guarantor’s liability under a guarantee bond, specifically regarding Clause 12, and whether such liability arises automatically or only upon the making of a demand after the termination of the contract. It was held that liability of the guarantor is contingent on a demand made after contract termination, and for a cause of action to arise against guarantors, the plaint must include an averment that a demand was made and not honored. The decision reaffirmed the principle that the guarantor’s liability does not arise in the absence of strict compliance with these requirements, with reference to the contractual provisions governing the guarantee. Emphasis was place