Study On The System Of Independent Guarantees In The International Exchanges

International exchanges tend to bear greater risk than that of domestic transaction in light of changing business practice across the globe. The parties involved as well as the target of such transactions are not confined to certain geographical locations. The divergence of legal systems coupled with marked difference in custom and social norms render it extremely difficult for actual law enforcement. To effectively make transacting parties adhere to contracting rules and fulfil corresponding responsibilities, it is not uncommon practice for one party to request form of guarantee from the other. In traditional guarantees, the guarantor is taken to bear secondary liabilities. Whenever the main debtor refuses to discharge his/her contractual obligation, the guarantor would proffer various forms of contending arguments on the basis of informal contract to counteract creditor's claim. The ever expansion of international economical exchange, in particular, the growing intensity of global economic integration in the late 1960s and 70s saw the booming of international trade that extend across several state zones, no longer would traditional forms of guarantee be capable of adapting to such changing development. It is under this context that emerges new area of concerns. We are prompted by the need to take into consideration the current economical exchange characterized by changing dynamic of market information and intricacies of diversified risk factors. The ability to overcome inefficiency inherent in traditional guarantee systems coupled with the need to avoid high cost and complexity in guarantee liability claims hence become matters that would warrant immediate attention in the new guarantee system formulations.A new form of independent guarantee system has been developed out of the changing business environment. It is called independent guarantee or independent banking guarantee to distinguish itself from traditional forms of practice. Having undergone years of practice, it has been widely implemented in international economic exchanges, including those of domestic trade. Compared with foreign legislation and execution, the current independent guarantee system reform in china is still inadequate with an ambiguous regulatory framework. The lack of actual execution in practice haslead to disparate viewpoints expressed on a single stated fact. Worse still is the decision that turn out to be completely different from stated legal relations, resulting in ultimate confusion and endless disputes. That said, the reality calls for an in-depth analysis of the independent guarantee system and a clear formulation of legal criterion to accommodate the changing needs of social and economic development.This introductory piece proposes a pressing need for us to establish an independent guarantee system. Chapter one gives a summary of the system, namely, its concept, basic forms as well as its application from an international perspective. Chapter two offers main research finding concerning its legal theory. It stipulates clearly that independent guarantee, in its very essence, is a form of disclaimer guarantee. This conclusion is arrived at by careful observance of issues such as its origin, basic structure, rights and liability analysis of contractual parties and so forth. In the third chapter, a trend analysis is presented having taken into account international treaties and conventions regarding changing legal relations in independent guarantee contractual practice. The fourth chapter addresses possible fraud and compensation problem from the standpoint of transactional security and balancing of interest for contracting parties, it probes into judicial and remedial measures adopted in independent guarantee systems. Having carefully evaluated current status and defects of the system, the author concludes in Chapter five with his suggested advice for the perfection of future independent guarantee system.