The Exceptions to the Principle of Independence of Bank Guarantees and Documentary Credits in Common Law Countries

Document Type : Scientific Research

Authors

1 Associate Professor of Private Law, Tehran University, Tehran, Iran

2 Master of Private Law, Tehran University, Tehran, Iran

Abstract

The principle of independence of bank guarantees and documentary credits is one of the well-established principles in international trade law. According to this principle, when paying the bank guarantees and documentary credits, the bank must establish that the documents presented to the bank for paying are in accord with the documents stated in the bank guarantees and documentary credits. The bank cannot refrain from paying by resorting to the objections raised with respect to the main contract. But this principle is not absolute. There are a number of exceptions to this principle including fraud, illegality of the main contract, nullity of bank guarantees and documentary credits, negligence of the beneficiary, unreasonableness and the exception stipulated in the main contract. The principle of independence of bank guarantees and documentary credits have been discussed, to a certain extent, in our legal materials but the exceptions to this principle have been referred to briefly. This article deals with the exceptions to the independence principle in common law countries succinctly and concludes that, except for the fraud exception, the common law countries differ with respect to the other exceptions. In fact, each of the above exceptions has been accepted by one or more common law countries.

Keywords

References

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کنوانسیون و مقررات بین المللی
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Uniform Commercial Code of the United States.
United Nations Commission on International Trade Law.
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Civil Law Knowledge
Volume 9, Issue 1 - Serial Number 17
October 2020
Pages 137-148

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