Document Type : Research Paper

Authors

• Majid Sarbazian ¹
• Seyyed Raza Hashemi ²

¹ Assistant Professor of Shiraz university

² M. A in Private Law of Shiraz university

Abstract

Bank guarantees are one of the most effective international instruments used in
commercial contracts. Without bank guarantees, it would not be possible to fulfil
obligations of the parties or the parties would encounter potential risks. Bank
guarantees provide the beneficiary with a certain and immediate payment of a
wealthy sponsor in his country. The only exception to the principle of independence
is the issue of fraud, which has universally been recognised. This exception could
prevent claim and payment to beneficiaries. The question addressed in this article
is: What are the international rules on the issue of fraud in bank guarantees and what
measures have been taken by the UN Convention on Independent Guarantees and
Credit Guarantees ? International Chamber of Commerce has been silent on this
issue or at least has not dealt with it expressly . However, the aforementioned
Convention is the only document that contains provisions regarding fraud, even
though it does not provide an exhaustive list and exact details. It nevertheless
provides a useful guidance for courts.

Keywords

• Demand for Payment
• The Principle of Independence
• Except for Payment Obligations
• The Prohibition of Payment
• Ffraud