Demand guarantee

A guarantee issued by a bank, under which the beneficiary is only required to make a demand in order to receive payment. In contrast to the conditional guarantee – which require the beneficiary to provide proof of the principal´s default – a demand guarantee only requires that the beneficiary make a simple demand, and therefore the latter guarantee is relatively risky in terms of exposure to un unjustified demand on the part of the beneficiary. Some protection against such an unfair demand can be obtained by making the guarantee subject to the ICC Uniform Rules for Demand Guarantees (URDG, ICC Publication 758).

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