I would like to have yr. comments in respect of provisions of art. 25biii , namely whether cancellation of guarantee within its period of validity (until expiry date) is subject to the presentation of beneficiary statement of release, irrespective that the original document has been returned by instructing party.
Thank you
art.25b - Cancellation of guarantee
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TudorTaslaoanu
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GlennRansier_
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art.25b - Cancellation of guarantee
b. Whether or not the guarantee document is returned to the guarantor, the guarantee shall terminate:
i. on expiry,
ii. when no amount remains payable under it, or
iii. on presentation to the guarantor of the beneficiary's signed release from liability under the guarantee.
If a guarantor desires to cancel a guarantee prior to its stated expiry date or event then the beneficiary must agree to its release. It is the same as any "irrevocable" undertaking. Just returning an undertaking may not be sufficient under all local laws so the rules reflect a practice that will ensure the right to cancellation.
i. on expiry,
ii. when no amount remains payable under it, or
iii. on presentation to the guarantor of the beneficiary's signed release from liability under the guarantee.
If a guarantor desires to cancel a guarantee prior to its stated expiry date or event then the beneficiary must agree to its release. It is the same as any "irrevocable" undertaking. Just returning an undertaking may not be sufficient under all local laws so the rules reflect a practice that will ensure the right to cancellation.
art.25b - Cancellation of guarantee
I wish it would be all over the world as Glenn mentioned, but it's still subject to local law.
In Ukraine (as well as in Russia and in some other countries, former members of Soviet Union) we have a lot of legislation which is in force since Soviet Union. And it's stated in Civil Code, that Ukrainian law always prevail over Rules in case of any contraditions.
One of the consequense out of it is that guarantee is cancelled upon return of its original to the guarantor (art.568 of Civil Code, therefore Beneficiary's release letter is not required), another one - Applicant shall be always Instructing party (art.560 of CC) etc.
Therefore, it would be better if you get some extract or legal opinion from respective Law regulating guarantee in question.
All the best,
Sergiy
In Ukraine (as well as in Russia and in some other countries, former members of Soviet Union) we have a lot of legislation which is in force since Soviet Union. And it's stated in Civil Code, that Ukrainian law always prevail over Rules in case of any contraditions.
One of the consequense out of it is that guarantee is cancelled upon return of its original to the guarantor (art.568 of Civil Code, therefore Beneficiary's release letter is not required), another one - Applicant shall be always Instructing party (art.560 of CC) etc.
Therefore, it would be better if you get some extract or legal opinion from respective Law regulating guarantee in question.
All the best,
Sergiy
art.25b - Cancellation of guarantee
I am not sure I understand Tudor’s posting. 25(b) does not suggest that return of the guarantee results in termination of the guarantor’s liability. Rather it merely says that retention of the guarantee does not allow the beneficiary to retain any rights if any of the events i. – iii. has occurred. This is unlike URDG458 Article 23 that provided return of the original guarantee did result in its cancellation.
This change of approach seems to me quite sensible as a guarantee might well be returned to a guarantor for a purpose other than cancellation (and I have always therefore been surprised by the importance many non-UK banks seem to attach to return of the original guarantee). Therefore, the statement in 25(b) that –unless events i. or ii. have occurred- the guarantee liability will terminate on presentation of the beneficiary’s release letter seems wholly unremarkable to me (and certainly I –if guarantor- would much prefer to have the beneficiary’s release letter than simple return of the original guarantee).
[edited 1/20/2011 10:56:19 AM]
This change of approach seems to me quite sensible as a guarantee might well be returned to a guarantor for a purpose other than cancellation (and I have always therefore been surprised by the importance many non-UK banks seem to attach to return of the original guarantee). Therefore, the statement in 25(b) that –unless events i. or ii. have occurred- the guarantee liability will terminate on presentation of the beneficiary’s release letter seems wholly unremarkable to me (and certainly I –if guarantor- would much prefer to have the beneficiary’s release letter than simple return of the original guarantee).
[edited 1/20/2011 10:56:19 AM]