On The Issue Of China's Independent Guarantee Its Practice

With the continuous development of international business, our guarantee system, which take "principal-subordinate contract theory" as foundation is challenged by independent guarantee system. Independent guarantee system is a special guarantee system of which the warrantor promise to the beneficiaries to unconditionally refund all the guaranteed debts in case that the warrantee fails to fulfill the debts, without any right of defense possessed by warrantors in common guarantees. The feature of independent guarantee is independence, which means that the guarantee is not dependent upon existence or validity of any underlying transaction and not subject to any term or condition not appearing in the letter of guarantee.In protecting the creditor's rights, the independent guarantee has some particular advantages over the subordinate one and thus is popular in international business practice. There have been more international usages and international treaties on independent guarantees along with the development of practice in this area. The convention on independent guarantee and stand-by letter of credit has come into force in Jan.1, 2000.As far as the banking business in china is concerned, the independent guarantee is welcome by beneficiaries and creditors. However, as the relative laws are not clear and the execution tends to be more or less biased, there is little room for the operation.The thesis introduces the basic concepts, the legal feature , the main form, and the theory on independent guarantee. By using the international law and practice for reference, my opinion is independent guarantee deserves special upholding from judicial system. In china, the independent guarantee should overcome its inherent shortcomings and grow to be a modern type of our own. In doing so, we must establish independent guarantee system and replace theory foundation of present guarantee law----"principal-subordinate contract theory" by the theory of "independent contract of guarantee", amend some parts of the present guarantee law.