Study On Legal Risk Control Of Independent Guarantee

Due to its independent and efficient characteristics, independent guarantee has been widely used in the international economy and trade, becoming an important part of international guarantee business. Compared with traditional accessory guarantee, independent guarantee ensures that the guarantee will not get involved in the complex dispute in basic contract and in the meantime the beneficiary can quickly get settled. Therefore it can better meet the needs of the rapid development of international trade, and has been generally accepted by the international community. However, the independent guarantee has its independence and other characteristics, increasing the possibility that beneficiaries may assume improper claims, which may bring quite a lot of risk to the applicant and the guarantor. Thus, in terms of legal risk control independent bond research, it is worth further discussion.This paper centers on improper claims of the beneficiary. First it analyzes the operation mechanism and source of legal risk of independent guarantees, and then exemplifies types of the legal risks of them, making detailed descriptions of improper claims and general response. At last, it concludes the current status concerning dealing with independent guarantee beneficiaries’improper claims and presents rational proposals. This paper is divided into four parts and the following sections respectively give detailed descriptions.The first part introduces the operation mechanism and source of independent guarantee’s legal risk. Independent guarantee is defined in terms of the operating mechanism, as well as compared with traditional accessory guarantee, payment and stop payment mechanisms. The biggest difference between them lies in independence and documentation features, and these two constitute the source of legal risk of independent guarantee, increasing the possibility that beneficiaries may assume improper claims.The second part lists the types of risk that banks, as a guarantor may face. Banks play a very important role in independent guarantee, rendering their reputation as warranties and ensuring that beneficiaries can be reimbursed timely after a reasonable demand for payment requests. But the banks are also faced with a lot of risks, such as beneficiaries’ improper claims, risk and exchange rate risk from the principal or anti guarantor. They all deserve adequate attention from banks.The third part highlights the article, exploring specific circumstances and determining procedure of beneficiaries’ improper claims and further classifying the control measures that applicant and guarantor should adopt. Applicants should carefully apply to unconditional guarantee, and regulate relevant documents when the beneficiary demands for payment. Meanwhile they ought to keep in appropriate contact with beneficiaries, strictly fulfilling their obligations on the basis of the contract so as to minimize the risk. As far as the banks are concerned, they should examine the specific circumstances of the parties while carefully negotiate the specific terms of the guarantee, and should not leave more space for beneficiaries’ improper claims.The fourth part summarizes responses to the status quo with regard to the beneficiaries’improper claims in our country from the perspective of legislative, judicial and academic fields. Also it puts forward its own proposals after considering the Supreme Court’s draft on the issue of the application of independent guarantee. This section emphasizes on how to improve the issue of beneficiaries’ improper claims in independent guarantee from the perspective of applicants, bank, judiciary and the legislature, and puts forward reasonable suggestions for improvements.