Meaning
International standard for demand guarantees that provides a uniform set of rules for the banking and commercial sectors. Such URDG 758 governs the issuance and operation of guarantees such as performance bonds and standby letters of credit in global trade. These rules were developed by the International Chamber of Commerce to balance the interests of the applicant, the beneficiary and the guarantor.
They apply when the text of the guarantee specifically incorporates them by reference.
Procedural Clarity
Standardization of the processes for making a claim and reviewing documents reduces the likelihood of delays. This includes the requirement that any demand for payment must be in writing and accompanied by a statement of default. When URDG 758 is used in a contract for connectivity modules, it provides a predictable framework for both the buyer and the seller.
The rules also define the timeframes for the bank to examine the documents and decide whether to pay.
Independent Obligation
Bank’s commitment to pay is separate from the underlying sales contract between the manufacturer and the buyer. This means the bank must pay if the documents comply with the guarantee, even if there is a dispute about the quality of the antennas. Because URDG 758 is recognized globally, it simplifies the negotiation of financial security in cross-border transactions.
Partial Demand
Beneficiaries are allowed to make multiple claims for smaller amounts until the total value of the guarantee is reached.
