On The Nature Of Independent Guarantee

With the development of modern business transactions, in order to controltrade risk effectively, a new form of personal security – independentguarantee has come into being. Confining to history and cognition, most ofpeople misunderstood the nature of independent guarantee. Throughcomparative and analytical approach, based on certain country's statute lawand legal practice in independent guarantee, this article makes acomprehensive and profound study on the legal nature of independentguarantee. This article consists of five chapters. Chapter I introduces the concept, basic structure and background ofindependent guarantee. Chapter II focuses on the independent nature of independent guarantee.From historical view, the article analyzes the nature of independence, and - 4 -considers that independent guarantee has no independent character in natureexactly. Misusing the nature of independence for Standby Letter of Credit(Standby L/C) is the main reason on this matter. The meaning of theindependent nature of independent guarantee is that, in the security document,a guarantor (bank) promise to abandon the beneficium excussionis andutilization of right for the debtor which includes the right of set-off, theright of exception or plea and the right of reimbursment. Chapter III discusses the subordinate nature of independent guarantee.From the examination of the meaning of subordinate nature, the author formsan opinion that the subordinate nature of independent guarantee contains twomeanings: the service character and the cause character. And the authorfurther considers that there is no contradictory between the independentnature and the subordinate nature of independent guarantee. Chapter IV makes a specific and detailed examination of the question ofthe unfair demand exception. The article concludes that the unfair demandfor pay or the fraud is not an exception of the independent nature forindependent guarantee. Chapter VI, combining with the nature of guarantee, presents a briefsummary and analysis of China's current legislation and practice ofindependent guarantee and puts forward the author's preliminary proposalsfor perfecting the relevant legislation and practice in our country. - 5 -...