On Legal System Of Independent Guarantees

In current intemational commercial society, there are almost no transactions without guarantees. However, traditional guarantees seem insufficient to meet the increasingly demands of commercial society for its inherent deficiency of value as globalization of world economy and new information era approaching. Initiated by the concept of efficiency-oriented, parties from all over the world demand not only achieve transaction efficiently but also pursue high efficiency of relief against breach.Independent Guarantee, as a new type of guarantee, has been developed and deemed to be "cash in hand" by reason of its independence from underlying contract so that beneficiaries could obtain compensation promptly and effectively without considering whether breach of contract by debtor exists or not. Standby letter of credits have developed into all-purpose financial support instruments which are used in a much wider range of financial and commercial activity than demand guarantees, and regularly involve practices and procedures, e.g. confirmation, issue for a bank's own account and so on.I managed to start with definition, origin, function and utilized forms of Independent Guarantee so as to further probe legal structure, legal relationship and risks distribution of Independent Guarantee for making research on principle of independence in my thesis. In order to disclose comprehensively essence of Independent Guarantee, I try to dig into intrinsic value by tracking back to Independence nature of letter of credit and combining with contemporary law theories.The process of development of Independent Guarantee has been accompanied by fraud deriving from its independent nature. Fraud always occurs when beneficiary viciously claim reimbursement when no breach occurs, underlying contract is invalid from the very beginning or revoked, performing time does not arrive or beneficiary forge relevant documents etc. Western countries acknowledged fraud exception and had established system of injunction that allows debtor to adduce evidence of beneficiary's fraud and apply for issue of injunction by court preventing bank from paying beneficiary. Opposite situations always exist when the banking sector and law circle are seeking for the balance between the independent characteristic and fraud exceptions. I will make my endeavor to clarify the logical relationshilps between the independent principle of guarantee and fraud exceptions, and make further analyses on how to find balance mechanism of interests for respective parties under various situations.This thesis finally gives an overview of current judicial practice of Independent Guarantee and uncovers disadvantages and potential financial risks in terms of both law theories and financial order. Referring to foreign legal practices, related international conventions and commercial practices, I put forward some feasible legislative proposals on framework of Independent Guarantee Law.