Preview

BRICS Law Journal

Advanced search

Demand Guarantees in the People’s Republic of China and the Republic of South Africa

https://doi.org/10.21684/2412-2343-2019-6-2-4-32

Full Text:

Abstract

Guarantees play an important role in large commercial contracts internationally. Guarantees can be either independent (demand) guarantees or accessory guarantees. The legal consequences of the two differ significantly and, therefore, it is important to differentiate clearly between the two. In the case of independent (demand) guarantees – the focus of this contribution – the guarantor’s liability is independent of the underlying performance it is guaranteeing, and is accordingly to be determined, in principle, with reference only to the terms of the guarantee. However, this is not an absolute principle. Jurisdictions throughout the world recognize exceptions to this principle, the most important and prevalent being fraud on the part of the beneficiary. A Judicial Interpretation by the Supreme People’s Court of the People’s Republic of China relating to independent guarantees came into operation in December 2016. Its rules depart in some important respects from the law of guarantees in South Africa, both in relation to the determination of the nature of the guarantee (as independent or accessory) and in relation to the exceptions to the principle of independence. This article explores these issues against the background of the law of contract of both countries.

About the Author

Ch. Hugo
University of Johannesburg
South Africa

Charl Hugo  – Professor of Banking law, Director of the Centre for Banking Law

A Ring 711 Kingsway Campus, PO Box 524, Auckland Park, 2006, Johannesburg, South Africa



References

1. David R. & Brierley J.E.C. Major Legal Systems of the World Today (3rd ed., London: Stevens & Sons Ltd., 1985).

2. Fu J. Modern European Chinese Contract Law: A Comparative Study of Party Autonomy (Alphen aan den Rijn: Kluwer Law International, 2011).

3. Glenn H.P. Legal Traditions of the World: Sustainable Diversity in Law (5th ed., New York: Oxford University Press, 2014). https://doi.org/10.1093/he/9780199669837.001.0001

4. Goode on Commercial Law (E. McKendrick (ed.), 5th ed., London: Penguin Books, 2016).

5. Horowitz D. Letters of Credit and Demand Guarantees Defences to Payment (Oxford: Oxford University Press, 2010).

6. Hutchison D. Non-Variation Clauses in Contract: Any Escape from the Shifren Straitjacket?, 118 South African Law Journal 720 (2001).

7. Introduction to the Law of South Africa (C.G. van der Merwe & J.E. du Plessis (eds.), The Hague: Kluwer Law International, 2004).

8. Kitagawa Z. Development of Comparative Law in East Asia in The Oxford Handbook of Comparative Law 237 (M. Reimann & R. Zimmermann (eds.), Oxford: Oxford University Press, 2006). https://doi.org/10.1093/oxfordhb/9780199296064.013.0008

9. Kleinheisterkamp J. Development of Comparative Law in Latin America in The Oxford Handbook of Comparative Law 261 (M. Reimann & R. Zimmermann (eds.), Oxford: Oxford University Press, 2006). https://doi.org/10.1093/oxfordhb/9780199296064.013.0009

10. Ling B. Contract Law in China (Hong Kong: Sweet & Maxwell Asia, 2002).

11. Lurie J. On Demand Performance Bonds: Is Fraud the Only Ground for Restraining Unfair Calls?, 25(4) International Construction Law Review 443 (2008).

12. Orucu E. Comparatists and Extraordinary Places in Comparative Legal Studies: Traditions and Transitions 467 (P. Legrand & R. Munday (eds.), Cambridge: Cambridge University Press, 2003). https://doi.org/10.1017/cbo9780511522260.013

13. Pete S. et al. Civil Procedure: A Practical Guide (3rd ed., Oxford: Oxford University Press, 2008).

14. The Law of Banking and Payment in South Africa (R. Sharrock (ed.), Cape Town: Juta, 2016).

15. Van der Merwe C.G. et al. The Republic of South Africa in Mixed Jurisdictions Worldwide: The Third Legal Family 95 (V.V. Palmer (ed.), 2nd ed., Cambridge: Cambridge University Press, 2012). https://doi.org/10.1017/cbo9781139028424.007

16. Zhang N. Abuse: An Exception to Payment Under Independent Guarantees in China, 26 International Company and Commercial Law Review 265 (2015).

17. Zhang N. Independent or Dependent: Chinese Rules of Interpretation for Determining the Nature of Guarantees, 29(2) Journal of International Banking Law and Regulation 114 (2014).

18. Zweigert K. & Kötz h. An Introduction to Comparative Law (T. Weir (trans.), Oxford: Clarendon Press, 1998).


For citation:


Hugo C. Demand Guarantees in the People’s Republic of China and the Republic of South Africa. BRICS Law Journal. 2019;6(2):4-32. https://doi.org/10.21684/2412-2343-2019-6-2-4-32

Views: 261


Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 License.


ISSN 2409-9058 (Print)
ISSN 2412-2343 (Online)