International guarantees on demand

It is common for a buyer to ask their seller for guarantees on first demand, either for the reimbursement of deposits or for the proper performance of the contract.

Apart from the basic conditions allowing the company to grant such a guarantee on behalf of its agent or subsidiary, for example, the question is:

–    Whether to use traditional first demand guarantees, in which case a simple formal notice is sufficient to obtain performance of the guarantee;

–    Or whether to use other systems that better protect the rights of the guarantor.

Example: URGD 758 established by the International Chamber of Commerce.

The main advantage of these requests lies in Article 15, which specifies the conditions for the acceptability of a payment request.

Any claim for payment under the guarantee must be accompanied by all other documents specified in the guarantee.

In other words, a buyer cannot invoke just any argument. They must justify that their claim under the guarantee corresponds to a breach of contract.

Thus, Article 17e) provides that a claim for payment is non-compliant if the statement or any other document required in the guarantee indicates amounts that, when added together, are less than the amount claimed.

These uniform rules, known as URGD 758, apply to any guarantee on demand or counter-guarantee that expressly states that it is subject to them.

These rules comprise 35 articles, examples of demand guarantees, and examples of counter-guarantees.

This system is more balanced and allows for discussion in the event of difficulties.

Thierry Clerc – 07/08/2025