URDG-758-Article 9 & 10

A guarantee is an irrevocable undertaking. There may be a situation when banks/entities are not in a situation to issue the guarantee due to exposure, regulations, and bank’s internal policy etc., In that case one will not take the applicant or instructing party application in consideration for issuance of the guarantee.

Article-9-URDG-758
Application not taken up

There may be several reasons that bank/entities (issuer) may deny to issue the guarantee such as exposure expired, no sufficient limit or not agree to do so etc. When at the time of receipt of the application if the banks/entities are not prepared or unable to issue the guarantee, they should without delay so inform the party that gave the instructions.

Article-10-URDG-758
Advising of guarantee or amendment

a. A guarantee can be advised to a beneficiary by an advising party. By advising a guarantee, either directly or by utilizing the services of another party (second advising party), the advising party signifies to the beneficiary and, if applicable, to the second advising party, that it has satisfied itself as to the apparent authenticity of the guarantee and that the advice accurately reflects the terms and conditions of the guarantee as received by the advising party.

In most of the cases applicant and beneficiary are located in different countries. Once the guarantee is issued it can be advised by the advising party located in beneficiary country, an advising party will often be a bank, however, there is no requirement that it must be a bank. The primary obligation of the advising party is that in advising the guarantee, it signifies to the beneficiary that it has satisfied itself as to the apparent authenticity of the guarantee and that the advice accurately reflects the terms and conditions of the guarantee. If a guarantee is issued in the form of an MT message apart from MT999 it deemed to be authenticated.

b. By advising a guarantee, the second advising party signifies to the beneficiary that it has satisfied itself as to the apparent authenticity of the advice it has received and that the advice accurately reflects the terms and conditions of the guarantee as received by the second advising party.

There may be a scenario (such as no RMA) when guarantee need a second advising bank/party as well, in that case second advising bank/party need to ensure the authenticity of the first advising party from whom guarantee is received.

c. An advising party or second advising party advises a guarantee without any additional representation or any undertaking whatsoever to the beneficiary.

An advising party or second advising party advises the guarantee without any undertaking and there roles are usually as postman to deliver the guarantee to the beneficiary.

d. If a party is requested to advise a guarantee or an amendment but is not prepared or is unable to do so, it should without delay so inform the party from whom it received that guarantee, amendment or advice.

In case if an advising party is not in a position to advise the guarantee further either to second advising party or beneficiary due to any reason such as relationship, regulatory requirement etc., must need to inform the party from whom it received the guarantee or amendment.

e. If a party is requested to advise a guarantee, and agrees to do so, but cannot satisfy itself as to the apparent authenticity of that guarantee or advice, it shall without delay so inform the party from whom the instructions appear to have been received. If the advising party or second advising party elects nonetheless to advise that guarantee, it shall inform the beneficiary or second advising party that it has not been able to satisfy itself as to the apparent authenticity of the guarantee or the advice.

If the advising party or second advising party are not able to satisfy to the apparent authenticity of the guarantee, it should inform the party from whom the instructions are received without delay. However, in case it still chooses to advise it must inform he beneficiary or second advising party that it has not been able to satisfy to the apparent authenticity of the guarantee.

f. A guarantor using the services of an advising party or a second advising party, as well as an advising party using the services of a second advising party, to advise a guarantee should whenever possible use the same party to advise any amendment to that guarantee.

An amendment should be advised via the same party using which guarantee was advised. There may be possibility that originally advised party bankrupted or not in exist due to any reason in that it can be advised via another advising party.