Independent Guarantees in the Anglo-American System of Law

Abstract

The modern independent (bank) guarantee originated in practice, and then was adopted by the legislation of various countries. There are two types of guarantees in England. Firstly, it is a guarantee of performance of obligations, or a guarantee in the narrow sense (suretyship). Secondly, it is a guarantee of indemnification (Indemnity). Similar types of guarantees exist in American law. The American approach to understanding the legal nature of a bank guarantee is based on two theoretical foundations. First, from the point of view of American courts, the distinguishing feature of an independent guarantee is its similarity to the institution of a documentary letter of credit. Secondly, the American courts came up with the idea of distinguishing between a contract of guarantee and a guarantee on demand. As a result of historical development, the concept of an independent guarantee, which was formed in international trade, was largely influenced by American banking legislation in connection with the expansion of trade relations with the countries of continental Europe.