| In the later part of the 19th century, Standbys originated as a kind of performance guarantee supplied by commercial banks to the local businessmen in America. After the 2nd World War, international economic relations were increasingly diversified and sophisticated, and traders were in great need of credit to finance their business. Standbys were excellent financial tools to meet the requirements of the traders and bankers in different countries. Today standbys are widely used in almost all economic fields such as international trade, biddings, performance guarantees, and finance. They have developed into real international financial tools. China began to deal with standbys in the 1980', however due to lack of experience, many banks were exposed to great losses induced by international frauds. In March 1993, the Hengshui branch (Hebei Province) of the Agricultural Bank was deceived to issue standbys valued over a dozen billion dollars. Although all the standbys were retrieved at last, the bank paid a high price for the lesson. So it's high time to learn relative rules in order to protect us form further losses while taking advantage of this new financial tool. So I choose this field to do my research, and I hope to make some contribution to the exploration of the usage of standbys in China. Standbys are still in development, at present, they are the general designation of all independent undertakings issued subject to ISP98. They may be standby L/Cs issued by banks, or independent Letters of Guarantee issued by insurance companies or even by the governments. They can be used as performance guarantees, or used in direct-payments free from defaults. They can be used both in local trade and in international deals. In a word, standbys are popular financial tools and settlement mechanism for its flexibility, credibility and convenience.The use of standbys has grown to such an extent that the issuance of such undertakings is now as much a part of the daily routine of banks worldwide as they are in their original country-U.S. Thanks to the efforts of financial experts and legalists in different countries, several pertinent international rules were compiled and went into effect successively. Such rules as URCG (1978), UCP400 (1983), URGD (1991), UCP500 (1993), United Nations Convention on Independent Guarantees and Standby Letters of Credit (1995), ISP98 (1998) have different purposes and impacts. In this thesis, I make comparison between ISP98 and UCP500, UCC5 (the Uniform Commercial Code Article 5, 1995 Revised), for all the three have important practical significance and research value: UCP500 and ISP98 are the most widely used international L/C Practices, and UCC5 is the only local law that brings the standby L/Cs into its jurisdiction. Chapter I makes detailed delineation of the definition and characters of the standbys with its focus on the comparison between several concepts: standby vs. clean L/C, standby vs. commercial documentary L/C, standby vs. surety and standby vs. banker's guarantee. Based on the comparison, I give prominence to the nature of the standbys, thus laying foundation for the two chapters thereafter.Chapter II makes a thorough comparison between ISP98 and UCP500. This chapter can be divided into three main parts: section 1 introduces the background and main commentary of the ISP98; section 2-6 makes comparison of the two rules article by article, section 7 is the summery of the whole chapter where I draw my conclusion from the comparison.Chapter III makes comparison between ISP98 and UCC5. Since there is little conflict between them, I only choose the UCC5 articles where there are discrepancies or where there are problems not touched by ISP98.After substantial comparison and analysis, I summarize the characters and significance of these three Rules as follows: 1. ISP98ISP98 was designed specifically as a stand-alone set of Rules for standbys. The purpose of the ISP98 is to articulate current practice and usage in the standby market and to simplify and standardize the... |
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