When does a surety not have to pick up the tab?

In Brown-Forman Beverages Europe Ltd v Bacardi UK Ltd, the Commercial Court held that it was not mandatory for Bacardi UK Ltd to pay some £51m to Brown-Forman Beverages Europe Ltd under surety obligations that Bacardi UK owed to Brown-Forman on behalf of its subsidiary Bacardi-Martini Ltd.

In an article written on behalf of the London Solicitors Litigation Association for The Law Society Gazette, John McElroy and Duran Ross, who specialise in commercial disputes, review the decision.

The judgment offers a helpful summary of the distinction between guarantees and indemnities, and the consequences of each term when it comes to the:

  • application of the rule in Holme
  • imposition of primary or secondary obligations.

For the full article.