Independent Bank Guarantee Of Legal Risk Study

According to the traditional civil law theory, guarantee is accessory. But with the rapid development of international commercial transaction, the independent banker's letter of guarantee (the independent bank L/G) becomes a very popular and important guarantee type. Its main feature is independence, which means the independent L/G provided by the bank is not dependent on existence or validity of any underlying transaction and not subject to any condition or right that does not appear in the independent banker's letter of guarantee.The Chinese banking is heading for the international financial market and facing the fierce international banking competition. This article hopes the research on the practice and theory of the independent bank L/G can help banks adopt the effective measures to avoid the law risks.This article is divided into six chapters. First, it introduces the basic knowledge. Secondly, it explicates the inevitability of the independent L/G's creation and development. Thirdly, it analyzes three kinds of law risks. Finally, this article advises that banks should pay attention to the above-mentioned risks and undertake some measures to avoid them. In Chapter One, the concept, the basic attributions, the parties concerned and their law relationships, the main law origins of the independent bank L/G are introduced.In Chapter Two, it analyzes the reasons of the independent bank L/G's creation and development: 1. the factor of credit resources of the guarantor; 2. the factor of the claim of the beneficiary's rights; 3. the bank providing the bank credit will benefit from the independence; 4. with the development of the international trade treaties, the rules will be more clear.In Chapter Three, because the independence of the independent bank L/G has put forward the rigorous challenge to the traditional civil law, the independent bank L/G's law position suffers a question. The validity risk is a disputed problem at many countries. It is an initial risk to decide whether the independent bank L/G can exist on the law meaning or not. The analysis for independence includes thefollowing contents: what is independence and how to judge it. Then we begin to analyze the validity risk. Because of the predilection to the theories of the traditional civil law, many countries do not or limitedly admit the validity of the independent L/G. Though the parties concerned can make an agreement about the independence, it will not be admitted in these countries. In our country, the independence guarantee is not adopted in domestic economic activities because of the negative attitude of our courts.In Chapter Four, the risks of the parties concerned are credit risks from every party. Generally, they perhaps come from the applicant, counter guarantor and beneficiary, may also come from the guarantor itself. The article tries to research the law risks of the parties concerned and give some advices to adopt the useful measures.Clause risks are implicit ones comeing from the clauses that are written in the independent banker's letter of guarantee. The clauses stimulate the rights and duties among the parties concerned, so they are very important and could bring risks. In Chapter Five, it studies five important clauses and gives the specialized measures to avoid the risks.In last chapter, because the guarantee bank is the main party undertaking the law risks, we analyze the characters and reasons of the L/G business law risks especially for the banking. Then, this chapter gives some measures: strengthen the investigation to the applicant; adopt counter guarantee; study carefully and keep supervising the credit of the applicant; enhance the contract draw-up work; pay more attention to the training for the related personnel.