The Risk And Prevention Of Demand Guarantee In International Trade

The global economy recovers gradually after the World War II, and it boosts international trade to a new level. With the prosperous development of international trade business and multinational engineering, trade volume expands fast, however the risk also grows at a high speed. As the saying goes," No guarantee, no trade". In order to avoid the risk during the trade, secure the safety of the transaction process, and mitigate the performance risk of both trade parties, as a new convenient and flexible security tool and "cash in hand", demand guarantee has been widely used in international trade since the1970s.As the export-oriented economy develops fast in recent years, the Chinese corporations also seek overseas business opportunities, and many of which have export-import huge volume goods and contracted large projects abroad, the guarantee business also soars at an unprecedented speed. The demand guarantee has becomes a strong credit support in overseas investment and E&M transactions. On July1st,2010, URDG758issue by International Chamber of Commerce entered into force, and it brings a new upsurge in studying demand guarantee rules. We must see that letters of credit no longer dominates the international business, and guarantee also plays an important role in it. However, no security tool is perfect and demand guarantee is no exception. Though completed both in theory and practice from the emergence of it, there is still risk in the practice of demand guarantee. So it’s urgent and important for both corporation and bank settlement department employees to be proficient in using guarantee rules, promote operational skills and recognize risk points. In view of this, this thesis conducts the following study of demand guarantee’s risk in international trade.The thesis is organized as follows:The introduction part introduces the background, purpose and significance of the study, review the domestic and foreign research status and research method.The second chapter defined the concept of demand guarantee, and elaborates its emergence, classification and function in international trade. We would also like to discuss the obligations and rights of related parties.The third chapter mainly analyzes the risk source of demand guarantee, different risk which related parties share, and text risk when issuing demand guarantee.The forth chapter mainly discusses how to avoid the risk of demand guarantee for related parties from guarantee requirement in commercial contract to guarantee claims. Also this chapter gives a special guarantee claims case of mid-east countries, analyzing how to control risk when facing complex environment in different countries.The last chapter concludes the whole thesis.In order for to play a more effective security tool in international trade, we need to analyze and summarize the risk of it. Meanwhile, as the guarantee market and demand is so huge, promotion the demand guarantee proficiency of the employees in the use of guarantee rules and operational ability has a vital significance for both corporations and banks.