A Study On Legal Relationship Of Demand Guarantee Parties

In order to control international trade risk effectively, in international business transactions, a ready, prompt and assuredly realizable guaranty is required and a new form of guarantee which is independent of underlying transaction has come into being, under the situation of the conversion from seller's market to buyer's market. The guarantee is called independent guarantee or demand guarantee.After development for many years, demand guarantee has been used widely in international trade, but there is not any specific law in our country, and we are not the member country of The United Nations Convention on Independent Guarantees and Standby Letters of Credit, we can't treat this convention as our legislation in independent guarantee area. So analyzing the rights and obligations of all parties of the demand guarantee will make it more available and convenient for the use of the demand guarantee and the operation of the international business transactions.This article starts with the analysis of the principles and techniques of the demand guarantee, and then demonstrates in detail about the rights and obligations of all parties (i.e. the principal, the guarantor, the beneficiary, and the instructing bank and issuing bank in indirect guarantee) of the demand guarantee, by discussing the definition, nature, structure legal sources, and classical cases of demand guarantee. Besides, attempts to examine a number of specific factual situations which constitute fraud in demand guarantee and their remedies. At last, the article presents a brief summary and analysis of China's current legislation and practice of demand guarantee and put forward the preliminary proposals for perfecting the relevant legislation and practice in our country.