demand guarantee
International
A guarantee that imposes a primary obligation on the issuer to pay the beneficiary on its first demand for payment, where the primary obligor fails to perform the contract. The issuer's obligations are not affected by disputes over the underlying contract between the beneficiary and the primary obligor. The guarantee is independent from the underlying contract which it guarantees and operates strictly in accordance with its terms.
There are various types of demand guarantee including tender, performance and advance payment. Similar in nature to on demand bonds and standby letters of credit (standby letter of credit) they differ from true guarantees (that is, contracts of suretyship). The obligation of the guarantor to make payment under a true guarantee is a secondary obligation dependent on the beneficiary establishing that the primary obligor is in breach of the underlying contract.
Related links
Uniform Rules for Demand Guarantees (URDG) Uniform Rules for Demand Guarantees (URDG) (http://uk.practicallaw.com/topic6-502-0542)
For more on demand guarantees and how they differ from true guarantees, see Practice note, Bonds, guarantees and standby credits: overview: The guarantor's obligation (www.practicallaw.com/4-107-3649).

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Look at other dictionaries:

  • Demand guarantee — In English writings, traditionally the term “guarantee” denotes an accessory (secondary) or “conditional” type of obligation. The essence of the instrument is the promise to answer for the duty of another should the other default. The beneficiary …   Wikipedia

  • Demand Guarantee — A type of protection that one party in a transaction can impose on another party in the event that the second party does not perform according to predefined specifications. In the event that the second party does not perform as promised, the… …   Investment dictionary

  • Demand priority — is a media access method used in 100BaseVG, a 100 megabit per second (Mbit/s) Ethernet implementation proposed by Hewlett Packard (HP) and AT T Microelectronics. Demand priority shifts network access control from the workstation to a hub. This… …   Wikipedia

  • guarantee — {{Roman}}I.{{/Roman}} noun 1 written promise by a company ADJECTIVE ▪ full ▪ The company offers a full money back guarantee. ▪ lifetime, three year, two year, etc …   Collocations dictionary

  • demand — {{Roman}}I.{{/Roman}} noun 1 firm request ADJECTIVE ▪ legitimate, realistic, reasonable ▪ I think your demand for a higher salary is perfectly reasonable. ▪ outrageous, unrealistic …   Collocations dictionary

  • guarantee — 1. noun 1) all repairs have a one year guarantee Syn: warranty 2) a guarantee that the hospital will stay open Syn: promise, assurance, word (of honor), pledge, vow, oath, bond, commitment, covenant 3) …   Thesaurus of popular words

  • Uniform Rules for Demand Guarantees — (URDG) International An international set of rules governing the rights and obligations of parties under demand guarantees produced by the International Chamber of Commerce. The current version, URDG 458, will be succeeded by a new version, URDG… …   Law dictionary

  • Job guarantee — The Job Guarantee (JG) is an economic policy proposal aimed at providing a sustainable solution to the dual problems of inflation and unemployment. Its aim is to create full employment and price stability. The economic policy stance currently… …   Wikipedia

  • Induced demand — is the phenomenon that after supply increases, more of a good is consumed. This is entirely consistent with the economic theory of supply and demand; however, this idea has become important in the debate over the expansion of transportation… …   Wikipedia

  • on demand performance bond — United Kingdom An on demand performance bond (also sometimes called a performance guarantee) involving an independent payment obligation, to be issued in letter form, typically by a bank …   Law dictionary

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”