Return of bank guarantees
20AA Return of bank guarantees
A lessor who receives a bank guarantee for a lease must return the original bank guarantee to the lessee within 2 months (the
maximum return period) after the lessee completes performance of the obligations under the lease for which the bank guarantee is provided as security.
Maximum penalty: $8 000.
A lessor is not required to return a bank guarantee if it has expired or been cancelled.
The maximum return period does not run for any period during which the matter of the lessor's entitlement to claim or realise the bank guarantee is the subject of proceedings pending in a court.
A lessor who is unable to return an original bank guarantee is able to satisfy the requirement under this section, or an order of a court to return the bank guarantee, by providing any consent or release necessary to have the bank guarantee cancelled.
A lessor is liable to pay to the lessee compensation for—
any loss or damage suffered by the lessee as a result of any failure by the lessor to return a bank guarantee in compliance with this section, or an order of a court; and
reasonable costs incurred by the lessee in connection with the cancellation of a bank guarantee because the lessor was unable to return the original bank guarantee in compliance with this section, or an order of a court.
This section applies to a bank guarantee whether given in respect of a lease entered into or renewed before or after the commencement of this section.
In this section—
bank guarantee means a guarantee from an ADI for the performance of the lessee's obligations under the lease.
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