Archive of Journal - Financing
Financing – scientific journal for economy
ISSUE 2017, No. 2, Article 5, Year of publication: 8, June, 2017
Abstract nature of demand guarantee as source of efficiency and risk of fraud
Ana M. Cvetković*
*Krajina a.d. Banja Luka
Autonomy and abstractness of demand guarantee provide simple collection process where the bank cannot issue complaints towards beneficiary which, on the other hand, can be issued by the principal, acting as debtor, towards beneficiary. This specific characteristic of demand guarantee provides advantage of fast and efficient collection, but also brings the risk of fraud. In practice, demand guarantees are often identified as unconditional guarantees or conditional guarantees as documentary guarantees. Therefore, considering it as useful, this work covered some theoretical and practical facts of the demand guarantee, it further explained some terms and guarantee types and it explained Uniform rules for demand guarantees, legal relations and essential elements of demand guarantees as well as abuse during collection process. The aim of this work is to examine the characteristics and acceptability of the demand bank guarantee acting as security means regarding the non-performance of contractual obligations in real-time conditions. Conclusion of this work shows that, for a good reason, the demand guarantee is one of the most used security means regarding fulfillment of contractual obligations, because it provides fast and efficient protection to its beneficiaries, but on the other hand, the fraud possibility should not be overlooked, which must be acceptable ground for payment suspension.
Keywords: Demand guarantee, Uniform rules for demand guarantees, suspension of guarantee payment, abuse during collection.