Study On The Transfer Of The Demand Guarantees

The institution of independent guarantee is a great innovation occurred ininternational trade financing recent years, compared to the features of protecting theobligation right traditional subordinated guarantee has; independent guarantee pays moreattention to financing. As the main body and product of theories of independent guaranteedirecting practicing, the demand guarantee is an increasing concern the moment it’s born,especially when URDG758is introduced. Independent of underlying contracts anddocuments processing endemic to demand guarantees make issuers (guarantors) in the riskof fraud easily. However, the beneficiary hopes to achieve fast and convenient financingthrough transferring guarantees in international bulk trade, which increases the risk offraud guarantors faced. In order to balance and solve to this contradiction, we mustanalysis the transfer of the demand guarantees in detail.First, transferring demand guarantees should be only defined of the transfer caused bythe beneficiary changed from the legal perspective. Secondly, combined with judicialpractice, transferring demand guarantees is divided into transfer of the rights andassignment of proceeds taking Article33of URDG758as the starting point, and weidentify the former as special assignment of the obligee’s right and the latter as thebeneficiaries freely disposing the expected property. Then, we are analyzing the legalstatus of guarantor, beneficiaries and transferees involved in transferring demandguarantees based on the two forms. Next, from theory to practice, we analyze the transferdemand guarantees applied to forfaiting and the complicacy of the transfer. Last but notleast, China should recognize the existence of independent guarantee on account of thelegal interpretation of Article5paragraph1in Security Law of the People’s Republic ofChina and the internal logic of inheritance in Article5through China’s attitude of theindependent guarantee in legislation and judicature. We put forward a reasonable systemon transferring demand guarantees in accordance with Rules of the Supreme People’s Courton Some Issues Concerning the Trial on the Disputed Cases over the Demand Guarantees (draft for comment). And we also propose applicable law of transferring domestic andforeign demand guarantees.