• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.72
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• pp.25-55
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• 2016

The Buyer shall demand to the Builder the repayment of the pre-delivery instalments paid in case of the Builder's default under a ship-building contract. The Buyer require a refund guarantee issued by a financial institution for a security for the repayment of the pre-delivery instalments paid. As the title of a refund guarantee, in practice, is various, we should look into the contents or the expressions in a guarantee to decide whether a guarantee is a refund guarantee. A refund guarantee, a sort of independent bank guarantee, has characteristic of abstractness, and is independent from the ship-building contract. A refund guarantee is available against the beneficiary's first written demand and signed statement certifying that the Builder failed to make the refund in accordance with the ship-building contract. The guaranteed amount of a refund guarantee will be automatically increased in accordance with the Builder's receipt of the respective instalment, which is not in the other advance payment guarantee. These characteristics of a refund guarantee are derived from the expressions in a refund guarantee rather than inherent therein. This illustrates that careful attention is required to the contents and expressions of the main clauses in a refund guarantee.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.58
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• pp.179-213
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• 2013

While a performance type guarantee is required as a security for non-performance risk by a seller, a payment guarantee is used as a security for non-payment risk by a buyer(or a borrower in a loan agreement). A payment guarantee is a type of independent bank guarantee, bank guarantee, bond, demand guarantee, or standby letter of credit. A guarantor accepts a credit risk of a principal which is normally a buyer in a contract for sale of goods. A payment guarantee is independent of the underlying relationship between the applicant and the beneficiary. The guarantor is only empowered to examine the beneficiary's demand and determine the payment on its face to the terms of the guarantee. A payment guarantee is thus different from a suretyship. The principle of independence carries a significant advantages for a guarantor as well as for a beneficiary. While a documentary credit requires B/L, commercial invoice, packing list, inspection certificate, etc., a typical payment guarantee does not require any evidence for a seller's performance of the underlying contract other than written demand. In this respect payment guarnatee can be a more secured facility than a documentary credit. A payment guarantee normally comes into force from the issuing date and shall remain in effect until all sums guaranteed shall be paid in full by a buyer(or a borrower) or by a guarantor. Although a guarantor shall pay a demand made in accordance with the terms and conditions of the payment guarantee, a payment demand may be denied when it is determined to be abusive or unfair.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.47
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• pp.157-182
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• 2010

A counter-guarantee is an independent undertaking and it functions in the same way as an ordinary independent guarantee. However, the typical notion of independence which applies to the relationship between the guarantee and the underlying contract cannot be exactly transposed to the relationship between the counter-guarantee and the primary guarantee, because the primary guarantor bears its duties that derive from the mandate. In this respect, this study reviews, with some critics, a Korean appellate court's decision and argues that, in spite of the principle of independence between the counter-guarantee and the primary guarantee, the primary guarantor may not be entitled to reimbursement from the counter-guarantor, if it is objectively evident that the primary guarantor has failed to perform its duty of verifying compliance under the primary guarantor or if it is objectively evident that the primary guarantor knows that it is objectively evident that there was fraudulent calling by the beneficiary under the primary guarantee.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.39
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• pp.87-103
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• 2008

Two kinds of security devices such as independent guarantees and standby letters of credit have been widely used in the international transactions. These devices design to protect one of the parties from a breach by its counter-party. Main uses of these guarantees and standby letters of credit are as follows : bid guarantee, performance guarantee, advance payment guarantee, payment guarantee, retention guarantee, etc. The standby letters of credit were first invented in the U.S.A. and have been widely used in the international and domestic contracts in the U.S.A. But the practical use of these credits is very unsatisfactory in Korea. The purpose of this study is to serve the increase of practical use of the standby letters of credit in Korea through the comparison study on the practical use of the credits between Korea and the U.S.A. Both devices are very similar in function, but they are very different in forms. The one has the form of letter of credits but the other has the form of guarantee. The letter of credit has the stability of governing rule, the legal certainty, and the preference in the field of the trade community comparing to the guarantee. I recommend to use standby letter of credit instead of bank guarantee in international transactions because of the merits of the credit aforesaid.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.39
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• pp.59-85
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• 2008

An independent bank guarantee(aka an independent guarantee) is provided as an security on a principal obligor's performance of his obligation, and a guarantor should pay the guaranteed amount only upon a beneficiary's written demand. A standby letter of credit has been used in the United States, since it was construed that a bank should not issue a guarantee. There was wide misunderstanding that a standby letter of credit differs from an independent bank guarantee. However, a standby letter of credit is the same security as an independent bank guarantee, and in international business a standby letter of credit is not differentiated from a independent bank guarantee. An independent bank guarantee are independent from the underlying contract, unconditional, and irrevocable. And a guarantor should pay upon written demand without proving a principal obligor breaches the underlying contract. These features of an independent bank guarantee has been abused in international transactions. Thus it has been proposed that some exceptions to the features of an independent bank guarantee should be allowed. United Nations Convention on Independent Guarantees and Standby Letter of Credit(1995) stipulates some exceptions to payment obligation. Export bond insurance, a part of export insurances, operated by the Korea Export Insurance Corporation under the Export Insurance Act, is used as a security for unfair calling by a beneficiary under an independent bank guarantee. Most of the export subsides by the government are prohibited under WTO's Agreement on Subsidies and Countervailing Measures. However, as export insurance is allowed under the WTO, it operates a significant role in enhancing the export. In the event that export bond insurance is provided for a guarantor, an obligor who is subject to recourse by a guarantor, can be exempt from the recourse in case of unfair calling. The Korea Export Insurance Corporation, an insurer, bears unfair calling risk by a beneficiary. Generally it is understood that a demand shall be made before the expiry of an independent bank guarantee. However this is not absolutely true, it shall be decided by URDG, ISP98, the governing law.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.51
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• pp.213-239
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• 2011

This article examines two important issues of the demand for payment by the beneficiary and the payment by the guarantor to the beneficiary under the revised Uniform Rules for Demand Guarantee (URDG) published by ICC, which are called URDG 758 and effected on July 1, 2010. Here, after first briefly defining the concept and nature of the demand for payment, this article discusses various issues surrounding the demand: By whom, where and how the demand has to be made; which documents are required in demanding the payment; how much amount can be demanded and paid; when and where the payment has to be made and which currency has to be used for the payment. The demand for payment has to be made by the beneficiary to the guarantor on or before expiry of the guarantee at the place of issuance of the guarantee unless any other place is specified in the guarantee. The demand has to be made in paper form unless the guarantee requires an electronic form. Unless otherwise expressly stipulated in the guarantee, the demand must be supported by a statement by the beneficiary indicating the applicant is in breach of the underlying contract. Also the demand must identify the guarantee under which it is made, and the time for examination by the guarantor starts on the date of identification. The demand cannot be for more than the amount available under the guarantee. When the demand is complying the guarantor must pay the amount demanded. The payment has to be made at the branch or office of the guarantor that issued the guarantee unless any other place is indicated in the guarantee. The payment has to be made in the currency specified in the guarantee, unless the guarantor is unable to make payment in that currency due to an impediment beyond its control or any illegality under the law of the place for payment. In case of "extend or pay" or "pay or extend" demands, the demand is deemed to be withdrawn if the extension is granted. But if not, the demand has to be paid without any further demand by the beneficiary.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.17
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• pp.7-35
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• 2002

In many international financing transactions Korean companies are required to issue a guarantee. Thus far, however, legal issues on international guarantees have not been fully discussed in Korea. This is partly because most of the international guarantees are governed by a foreign law such as English law or the laws of the State of New York. In this articles the author examines major concepts or terms and conditions of a typical international guarantee, e.g., language on consideration, primary obligor, joint and several guarantee, unconditional and irrevocable guarantee, continuing guarantee, right of subrogation, representations and warranties, covenant or undertaking, currency indemnity, assignment, participation, governing law and jurisdiction clause, etc. For reference, standard forms of a guarantee and a standby letter of credit are attached to the article. In examining the terms and conditions, the author compares them with similar or equivalent concepts under Korean law. The author further discusses some Korean law issues that may arise under international guarantees governed by a foreign law. These issues include the application of the ultra vires doctrine under Article 34 of the Civil Code of Korea, the validity of an international guarantee which a Korean company has issued in violation of the guarantee ceiling set under Article 10 of the Law on Monopoly Regulation and Fair Trade of Korea and the validity of an international guarantee which a Korean party has issued in violation of the Foreign Exchange Transaction Law. In addition, the author discusses some issues under a so-called independent guarantee and a standby letter of credit. In this regard, reference is made to the Uniform Rules for Demand Guarantee (URDG), International Standby Practices (ISP98) and the Convention on Independent Guarantees and Stand-by Letters of Credit adopted by the United Nations in 1995. Finally, the author examines major terms and conditions of typical comfort letters and discusses some legal issues, such as the binding force of the comfort letter. In dealing with the issues the author underscores that to the extent the issues are not properly dealt with by an international norm such as Uniform Customs and Practice for Documentary Credits or ISP 98, the issues must be analyzed by reference to the governing law of the relevant instrument.

• THE INTERNATIONAL COMMERCE & LAW REVIEW
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• v.71
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• pp.85-105
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• 2016

Independent guarantee is new financial product developed in international commercial transaction. The nature of independent guarantee is an independent undertaking, which takes the form of documentary transaction. As long as the documents presented by the beneficiary are on their face complying with the terms and conditions of the guarantee, the guarantor is obliged to pay upon the complying presentation. Where parties choose to apply for issue of independent guarantee in international commercial transactions in China, Chinese court shall respect the autonomy of parties. If either the guarantor or the beneficiary is located outside of China, or the facts which cause the establishment, change or cancellation of independent guarantee relationship occurred outside of China, it shall be deemed as foreign related independent guarantee. If the interested parties requests for confirmation of the independence of foreign related independent guarantee, it shall be supported by Chinese court. However, parties dealing with Chinese domestic commercial transaction have not fully realized the severity of independent guarantee liability. The market credit is being cultivated and the financial innovation is being explored at present in China. In order to guard against the systematic and the regional financial risk, before relevant rules are promulgated, Chinese court shall not recognize the independence guarantees issued for the domestic commercial transaction, but treat it as joint liability surety.

• Korean Management Science Review
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• v.28 no.1
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• pp.75-90
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• 2011

In B2B e-Commerce market, many companies used in B2B e-Commerce Guarantee Service. Guarantee service raised the stability of collect debts for seller, and made purchase fund for buyer. In 2001, The first year of implementation, B2B e-Commerce Guarantee Cost was just a 19 billion, but in 2008 was significantly increased a 3 trillion 982 billion. In previous studies, however, there was no research on performance management. This study focus on design of KPI weighting for measuring performance of B2B e-Commerce Guarantee Intermediary Service. Through analysis for 'B2B e-Commerce Guarantee Intermediary Service', the study selected KPI and made the KPI weighing. the process of designing a KPI weighting is 5 phase. This study suggests the standard of measuring performance and guidelines on the focus management of KPI in B2B e-Commerce Guarantee Service.

• 한국디지털정책학회:학술대회논문집
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• 2005.06a
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• pp.145-175
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• 2005

In 2001, e-Credit guarantee system was introduced by the Korea Credit Guarantee Fund(KCGF) to extends the credit guarantee services for the purchasing amount on credit in the B2B e-Marketplace. It combines both the merits of bill of exchange and credit card and eliminates the uneasiness related to the unpaid accounts due to the non-facial e-Marketplace. The purpose of this paper is to empirically analyze both the causal relationship and influences among theoretical variables by the structural equation model(SEM). e-Credit guarantee system can be a good strategy for promoting B2R e-Marketplace. The level of application of e-Credit guarantee system is attributable to both the characteristics of B2B e-Marketplace and products. The cost reduction or saving in purchasing procedures, production and stockpiling will be possible through e-Credit guarantee system. The close linkage of financial institutions with the enterprises based on e-Credit guarantee system will further promote B2B e-Marketplace in Korea.