On Independent Assurance System And Our Independent Assurance System

Since 1960s, with the rapid expansion of international transaction, the credit crisis in international transactions has become more and more serious. The traditional system of Subordinate Guarantee can not deal with the transnational credit crisis in a effective way because of its nature of subordinate. So in the practice of international transactions, people gradually developed a system of Independent Guarantee which is totally different from the traditional Subordinate Guarantee, with the former is taking the dominant place of the latter. In current international transactions, the system of Independent Guarantee if widely accepted and frequently employed by the parties.There is no uniform definition home and abroad about the meaning of Independent Guarantee. But according to its interaction, we can see that Independent Guarantee is an undertaking in writing issued by the guarantor in reply to the application of the opener (the debtor of the underlying contract), to the beneficiary (the creditor of the underlying contract), in which the guarantor promises to pay if the beneficiary claims a compensation and produces qualified documents. In the practice of international finance and guarantee, Independent Guarantee can be mainly classified into demand guarantees and stand-by letter of credit. This paper begins with the concept and features of Independent Guarantee, and further moves to the basic rules, theoretical basis, general structure and legal relationship, and present legislation and judicial practice. Based on the comprehensive grasp of the differences between Subordinate Guarantee and Independent Guarantee, we can easily recognize the disadvantages of our security rules.Developed market economy cannot part from mature credit system. In return the establishment of credit system depends on the sophisticated legal system, especially security system. Based on the discussion above, we shall conclude the Independent Guarantee is, as compared with Subordinate Guarantee, also an important security system, and the establishment of Independent Guarantee is the trend for development of security law.