International Standby Letter of Credit and Guarantee

Author: Xu Jinliang
Publisher:
Publish Date: 2004-09-01
Features: According to the commitments made by China upon its entry into the WTO, all enterprises will automatically obtain import and export rights three years after entry. This means that starting now, almost all Chinese enterprises will join the foreign trade and economic cooperation team, and purely "domestic trade enterprises" will almost cease to exist. Companies that do not understand import and export transactions will find it difficult to survive in the increasingly "internationalized" domestic market. More and more enterprises in China will be able to engage in import and export transactions, and talents with international business knowledge will definitely be in high demand in the 21st century. In international business activities, traders have increasingly comprehensive requirements for financial services due to considerations such as settling debts, obtaining financing convenience, reducing transaction costs, and avoiding risks. Letters of guarantee and standby letters of credit are multifunctional financial products that integrate guarantees, financing, payment, and related services. Due to their wide range of applications and flexible operation, they are widely used in international business. For example, in 1998, the ratio of standby letters of credit to commercial letters of credit globally was as high as 7:1. To further standardize the practice of standby letters of credit worldwide, the International Chamber of Commerce (ICC) officially issued the "International Standby Practice (ISP98)" on April 6, 1998, which came into effect on January 1, 1999. Since 1999, domestic enterprises have begun to receive standby letters of credit issued abroad based on ISP98. However, due to the lack of in-depth research and widespread promotion of ISP98 in China, the use of standby letters of credit in China has been greatly limited. To establish a unified international credit guarantee rule applicable to all countries, the ICC also issued the "Uniform Rules for Contractual Guarantees (URCG)" in 1978 and the "Uniform Rules for Demand Guarantees (URDG)" in 1992. It is worth noting that given the common characteristics of independent guarantees and standby letters of credit, to help overcome the ambiguity and inconsistency in various legal systems in this regard and facilitate their widespread use in international trade, the United Nations Commission on International Trade Law passed the "United Nations Convention on Independent Guarantees and Standby Letters of Credit" on December 11, 1995, aiming to unify the two. Therefore, it has become our urgent task to study and learn the "international common rules" in the field of guarantees, such as the "International Standby Practice," "Uniform Rules for Contractual Guarantees," "Uniform Rules for Demand Guarantees," and the "United Nations Convention on Independent Guarantees and Standby Letters of Credit." This book highlights novelty and practicality, explaining the rules in detail through numerous classic cases, and includes several sample forms and tables commonly used in actual business, aiming to enable readers to master and flexibly apply them in a short period of time. Therefore, it is a new reference book for international business personnel, legal professionals, foreign-related financial practitioners, and students majoring in foreign trade and economic cooperation. The authors of this book include: Dr. Xu Jinliang from the University of International Business and Economics (Chapters 2 to 4), Dr. Bu Wei from Beijing Jiaotong University (Chapters 5 to 9), Associate Professor Li Zhen from the Central University of Finance and Economics (Chapter ), and Zhang Xin, a master's student from the University of International Business and Economics (Chapter 10). Additionally, Liu Chaoyong, a student from the Information Science Department of the University of International Business and Economics, is responsible for the computer-aided drawing of the illustrations in this book.