In the interim, Rubicon made a demand on Krisenergy under the Guarantee for the total sum outstanding under the four invoices. Krisenergy declined to pay. Its reasons included that: 1. Krisenergy was only required to pay pursuant to clause 5 where liability to pay sums had been admitted by Kegot (and only quantum remained in dispute). As liability had not been admitted, Krisenergy was not required to pay. 2. In any event, the demand was not compliant with clause 3 of the Guarantee, and therefore, it did not trigger Krisenergy’s payment obligation. Decision The Commercial Court disagreed with Krisenergy’s reasons and decided that the demand was valid, and that Krisenergy was obliged to pay the full sum demanded within 48 hours (as it did not exceed the USD 3 million maximum sum payable on demand under clause 5). The Commercial Court’s reasoning is detailed below. (1) Payment on Demand A so-called true guarantee typically imposes a secondary obligation on the guarantor to “see-to-it” that primary obligations under the relevant underlying contract are performed. The obligation on the guarantor to pay is therefore dependent on whether or not there has been a breach of an obligation under the underlying contract. Such instruments are typically issued by companies that have a commercial relationship with the primary obligor, such as parent companies. An on-demand bond, on the other hand, typically imposes an autonomous, primary obligation on the guarantor to pay ‘on demand’ (i.e. upon receipt of a demand for payment that is compliant with the terms of the bond), regardless of whether liability for breach of the underlying contract has been established. These are commonly issued by banks. (For a