Reasonableness of Surety Collateral Demands
By David A. Harris September 30, 2019 Articles
The General Agreement of Indemnity typically includes a collateral demand provision that gives the surety a right to demand collateral security from the indemnitors to protect against future losses. To enforce the provision the surety will seek specific performance, requiring the Court to consider whether the collateral demanded by the surety is reasonable. This was the question before the Court in RLI Insurance Co. v. Pro-Metal Construction, Inc., Case No. 18-cv-2762(AJN), 2019 WL 1368851 (S.D.N.Y. March 26, 2019).
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