CHAPTER 29 - GENERAL - BANK GUARANTEES

URDG758 governs the operation of Bank Guarantees

It is an undertaking/promise/indemnity given by a Bank on behalf of the Applicant and in favour of the Beneficiary. Whereas, the Bank has agreed and undertakes that, if the Applicant failed to fulfill his obligations either Financial or Performance as per the Agreement made between the Applicant and the Beneficiary, then the Guarantor Bank on behalf of the Applicant will make payment of the guarantee amount to the Beneficiary upon receipt of a demand or claim from the Beneficiary.

Bank Guarantees earlier governed by URCG (Uniform Rules for Contract Guarantee), now it has been replaced by URDG (Uniform Rules for Demand Guarantees).

In Bank Guarantees not all the Types of Guarantees where Buyer or Importer needs to be Applicant and Seller or Exporter need to be Beneficiary. Only in few types that concept will work.

Bank Guarantees can also be called as Demand Guarantees and Guarantees.