Original scientific paper

First demand bank guarantees

Petar Miladin

Abstract

First demand bank guarantee is a special form of solidarity warranty. The warrant has to pay as soon as he is demanded to do so by the beneficiary. The beneficiary gives the warrant a declaration which is precisely regulated as a prerequisite for payment in the first demand guarantee contract. The declaration is highly formalised and it has to correspond to that which is stipulated in the contract.
In the procedure of payment of the first demand bank guarantee the bank cannot give objections which it is otherwise entitled to according to the Article 116 of the Law on Obligatory Relations (LOR). The warrant and the beneficiary have to agree that the warrant cannot give objections to the beneficiary that the principle debtor has towards the beneficiary issuing from their fundamental relationship including the objection on invalidity of the fundamental transaction. Contractors are entitled to the rights contained in the above regulation of the Law on Obligatory Relations, since this is not a compulsory regulation in the LOR. The rule suffers from certain limitations if the right of the warrant to give the above objections (the article 116 LOR) is excluded by general operating conditions. Even in the case of a bank guarantee and the first demand bank guarantee, the bank can deprive the beneficiary of payment only if it is evident or can be proved that the beneficiary is abusing his formal legal position based on the bank guarantee or the first demand bank guarantee.
The legal nature of the first demand bank guarantee is fully manifested only in the regress procedure after the beneficiary has received payment without justification, since in that case there is no further reason to restrict the accessory status of the first demand bank guarantee. In the procedure of guarantee payment the first demand warrant has the status of the first demand guarantor to be restituted the warrant status later. The accessory quality of the first demand bank warranties is temporarily excluded, while in the case of first demand bank guarantees it is finally excluded.

Keywords

first demand bank warranty; first demand bank guarantee; payment procedure; regress procedure

Hrčak ID:

6437

URI

https://hrcak.srce.hr/6437

Publication date:

5.12.2006.

Article data in other languages: croatian german

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