BANK GUARANTEE: THE STATEMENT MAY BE IN THE DEMAND OR IN A SEPARATE DOCUMENT ACCOMPANYING THE DEMAND

QUESTION

Hi Mr. Old Man.

A guarantee stipulates following conditions(part):

The guarantor will pay beneficiary on receipt of XXX’s written demands made to the Bank stating that in XXX’s opinion the Vendor (a) fails to observe, perform or discharge any of its obligations under the Order or (b) becomes insolvent, bankrupt or go into liquidation or otherwise put in a similar situation.

The Bank shall not require XXX to prove the Vendor’s above situation in any way.

This bank guarantee is subject to the Uniform Rules for Demand Guarantees URDG 2010 Revision, ICC Publication No. 758.  However, the submission of additional documents and statement that satisfies Article 15 (a) may be required as supplements for the demand of the bond.

1. In accordance with last paragraph, does the supporting statement need to be presented with demand?
2. Despite the last paragraph, if the beneficiary presented demand with statement that the vendor becomes insolvent, bankrupt, does the statement itself satisfy the article 15(a)?

Best regards,

Kevin

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ANSWER

Hi,

1/ The statement may be in the demand or in a separate signed document accompanying or identifying the demand.

As mentioned in the first condition, the guarantor will pay beneficiary on receipt of XXX’s written demands made to the Bank stating that in XXX’s opinion the Vendor (a) fails to observe, perform or discharge any of its obligations under the Order or (b) becomes insolvent, bankrupt or go into liquidation or otherwise put in a similar situation.

It is understood that the statement must be included in the request. Therefore, there is no need to present a separate statement with the request unless requested.

2/ If there is no requirement to present a separate statement, a demand including the required statement is sufficient.

Best regards,

Mr. Old Man