Independent Guarantee Of Legal Issues In International Trade Research

According to traditional civil law theory, guarantee is typically accessory. With the expansion of international transaction and the development in advanced settlement, guarantee becomes a routine clause in international commercial contract. Since traditional accessory guarantee could not satisfy the demand of transaction parties in new commercial backgrounds, a new guarantee, independent guarantee, was created, which is very popular and highly approved in modern international trade. Although having experienced fifty-year practice, independent guarantee is far from perfect as differences in legal tradition and trade position among countries exist. In despite of related international treaties and practices, different courts acknowledge independent guarantee to different extent and in different way. Increased independent guarantees are issued and increased attention is attached to them. There are mainly two issues in the research on independent guarantee: First is how to define the validity of independent guarantee, and second is how to eliminate fraud in independent guarantee. About the first question, as we know, guarantee is born to be accessory. A guarantee which disposes dependence, challenges traditional mechanism fundamentally and is inevitably questioned by people: Is it still a guarantee? More and more countries confirm its validity by legislation or in cases, while still, quite a few countries, many of which are the-thirdworld ones, do not make any acknowledgement or differentiate between domestic guarantee and foreign guarantee like China. About the second one, independence is not absolute wherever. In such cases as fraud and misuse of rights, the independence is to be restricted. But what is fraud and misuse of right? Different courts hold different opinions and even the same court hold different opinions in different stage. The standards are solved by domestic laws. Countries like China never develop such standards in statute laws. My opinion is that we should establish our legal system on independent guarantee. The regulations in this area are predominantly administrative law, which is not coincident with its contractual nature, so we should construct a new private legal system to regulate independent guarantee. Some concrete feasible ideas are given in consequence. Also, I review the some risks of the banks who deal with this business and give some suggestions in how to avoid them.