What is the letter of guarantee business?

Bank guarantee business refers to the written commitment document with guarantee nature issued by the bank at the request of customers. Once the applicant fails to repay the debt or fulfill the agreed obligations as stipulated in the contract signed with the beneficiary, the bank will fulfill the guarantee responsibility.

Characteristics of bank guarantee business:

1, guaranteed by bank credit, easily accepted by customers;

2. The letter of guarantee is issued according to the commercial contract, but it is not attached to the commercial contract. It is a legal document with independent legal effect. When the beneficiary makes a reasonable claim according to the letter of guarantee, the guarantee bank must bear the responsibility for payment regardless of whether the applicant agrees to pay or not, and regardless of the actual facts of contract performance. That is, the letter of guarantee is an independent commitment and basically a documentary transaction business.

Extended data:

Functions of the letter of guarantee:

When the goods are delivered by letter of guarantee, the consignee promises to return the full set of original bill of lading to the shipping company immediately after receiving the bill of lading, and bear the freight and other expenses that should be paid by the consignee, as well as all losses caused by the failure to submit the bill of lading, and indicates that the bank and the consignee are jointly and severally liable for the contents of the letter of guarantee. Issue a bill of lading with a letter of guarantee, so that the shipper can settle foreign exchange smoothly with the clean bill of lading and the on-board bill of lading.

Neither The Hague Rules nor the Visby Rules provide for the legal effect of the letter of guarantee. Considering the practical significance of letter of guarantee in shipping business and the need to protect innocent third parties, Hamburg Rules clearly defined the validity of letter of guarantee for the first time.

The letter of guarantee is an agreement between the carrier and the shipper, and shall not be against a third party. The letter of guarantee between the carrier and the shipper is valid only if there is no intention to deceive a third party; If it is found that the carrier intentionally deceives a third party, the carrier shall not enjoy the limitation of liability when compensating the third party, and the letter of guarantee shall be invalid.

Baidu encyclopedia-letter of guarantee

Baidu encyclopedia-letter of guarantee business