GURATEES OUT SIDE URDG

With the introduction of Uniform Rules for Documentary Guarantee or URDG 758, the rules for Documentary Guarantee seem to be popular again. It can be imagined from the increasing number of questions that have popped up in recent days. Documentary Guarantee Forum is an effort to develop a platform to discuss these questions.
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snk
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GURATEES OUT SIDE URDG

Post by snk »

Hi dears,
views please...
1) is it always necessary to issue gurrantee under URDG.?
2) guarantees oustside URDG will be suject to what law...'?

If a counter gurantee is isued under URDG by a bank ..is it necessary that a gurantee issued on its strength is also subjected to URDG rules...??

thanks and regards..
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picant
Posts: 1942
Joined: Wed Aug 20, 2008 1:49 pm

URDG

Post by picant »

Hi Pal,

Many guarantees are issued outside URDG, some responding under local laws, not known by the foreign parties.
Under URDG parties are aware of the rules regulating this issue and so they know risks etc.
Art 1b URDG 758 clearly explain that if a demand guarantee is subject to the URDG, the counter guarantee is subject to the URDG too, if the counter gurantee is subject to the URDG, a demand guarantee does not become subject to URDG automatically.
A Bank issuing a dem and guarantee on behalf of counter-uarantor will evaliate the risk incurred.
Other comments appreciated
Ciao
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