URDG 758: key concepts


Most commentators identify the early 1970's as the key period in the global uptake of the usage of demand guarantees. Increased usage of standby letters of credit in the U.S. can be tracked back a few years earlier.


Guarantees are predominantly issued subject to local law, mainly based on historical preference. The wording of a guarantee is very often driven by the beneficiary who will provide the text, with instructions to the applicant to arrange issuance in exactly, or substantially, the same form, which may include issuance in a local language.

Issuance can also be according to standard text maintained by the guarantor for each type of guarantee e.g., performance, bid or tender, advance payment, etc.

ICC Rules - background

  • 1978: URCG (Uniform Rules for Contract Guarantees), ICC Publication No. 325. Not successful in supporting the handling of demand guarantees which were, effectively, excluded from the coverage of the rules as they were focussed primarily upon demands / claims that included a judgement or arbitral award.
  • 1982: The Model Forms for Issuing Contract Guarantees, ICC Publication No. 406. Supporting publication to the above Contract Guarantee rules.
  • 1992: URDG (Uniform Rules for Demand Guarantees) ICC Publication No. 458. First release of an ICC publication addressing rules for demand guarantees. Achieved relative success but never attained global adoption, partially due to the article covering demands for payment, which was seen by many in the trade community as not in line with practice.
  • 2010: URDG (Uniform Rules for Demand Guarantees), ICC Publication No. 758. This revision provided an opportunity to bring all comments, experiences, criticisms and feedback regarding URDG 458 and the practice of demand guarantees into a new revised and comprehensive set of rules. This version is more exact and avoids the possibility of misinterpretation that existed with URDG 458. In addition, it is made more transparent and readable by following the logical sequence of a guarantee lifecycle.

URDG 758 - overview

  • Article 1 makes it clear that the rules apply to a demand guarantee or counter-guarantee when such instrument includes a statement as to the applicability of the rules. Those familiar with other ICC rules will recognise the premise that the rules are binding on all parties unless modified or excluded by the text of the guarantee or counter-guarantee.
  • As with other ICC rules, these rules contain a number of key definitions and interpretations. It is strongly recommended that practitioners read articles 2 (definitions) and 3 (interpretations) very carefully so as to understand the intentions and implications of each definition and interpretation.
  • Article 4 concerns itself primarily with the irrevocability of the guarantee. A guarantee is considered as issued once it is dispatched, transmitted or handed over, and irrevocability commences from that moment - even if the guarantee does not specifically state that it is irrevocable.
  • Article 5, relating to the independence of guarantees and counter-guarantees is indirectly lifted from the UCP where it has been tried and tested over many years.
  • As a natural consequence of article 5, article 6 highlights that a guarantor is only concerned with ‘documents'.
  • The key point within article 7 is that a demand guarantee is documentary by nature, and therefore any non-documentary conditions are to be ignored.
  • Article 8 addresses the recommended content of an instruction or guarantee that should always be apparent.
  • On occasion, a guarantor may not be in a position to issue a guarantee. This is covered by article 9.
  • Article 11 focuses on amendments and much of the content will be recognisable to those acquainted with the UCP.
  • Article 12 outlines that the liability of the guarantor extends only so far as that expressed in the terms and conditions of the guarantee, and in accordance with the rules as far as they are consistent with the guarantee, up to the maximum amount stated.
  • It is common practice that the amount of a demand guarantee can often be decreased (or occasionally increased) during its lifetime, either on certain dates or on the date of a particular action or event, and this is covered by article 13.
  • It is important that close attention is paid to article 14 (presentation), as non-adherence is likely to result in a non-complying demand. Ensure that you understand the meaning of ‘presentation' by referring to the definition given in article 2 of the rules: "means the delivery of a document under a guarantee to the guarantor or the document so delivered. It includes a presentation other than for a demand, for example, a presentation for the purpose of triggering the expiry of the guarantee or a variation of its amount".
  • The requirements for any demand, and information about the demand, are addressed in articles 15 and 16.
  • Continuing in the same vein, articles 17 and 18 cover partial, multiple and separateness of demands.
  • Article 19 looks at the examination process which has three facets; data is examined within the document itself, against the guarantee, and in line with the applicable rules. Absolute strict compliance of data is not required provided that any data does not conflict with other data in the document itself, any other document or the guarantee.
  • As outlined in article 20, a guarantor has up to five business days following the day of presentation to examine a demand in order to ascertain if it is compliant. It should be noted that this is a maximum period. Examination will, generally, be completed over a shorter period as dictated by local practice and competitive issues.
  • Article 21 addresses the currency of the payment, whilst article 22 focuses on transmission of copies of a complying demand.
  • A scenario frequently seen in the area of demand guarantees is ‘extend or pay' which relates to a beneficiary requesting an extension to the expiry or, if this is not given, settlement of its demand for payment. Article 23 expands upon this situation.
  • Not all demands are compliant and article 24 outlines the procedure to be followed in the event of a non-compliant demand.
  • Article 25 lists the three scenarios when the amount payable under a guarantee can be reduced.
  • It could be the case that one of the parties involved in a guarantee transaction is prevented from performing an action by a force majeure event that is outside its control. As stated in article 26, such circumstances include acts of God, riots, civil commotions, insurrections, wars, acts of terrorism or any causes beyond the control of the guarantor.
  • Article 27, disclaimer on effectiveness of documents, is sourced from the UCP and adapted for demand guarantees.
  • Based upon article 28, a guarantor is exempted from liability for the consequences of a number of transmission events including: delay or late delivery by a delivery service; disruption in the sending of electronic data; loss of a document or data; mutilation of a document; errors in the transmission of any document.
  • Articles 29 and 30 cover disclaimers for the acts of another party and limits on exemption from liability.
  • Article 31 addresses obligations and responsibilities imposed by foreign laws and usages.
  • Clarification of the party responsible for the payment of charges or fees is important and is covered by article 32.
  • Transfer and assignment are covered in detail within article 33.
  • As covered in article 34, unless there is a condition to the contrary within the guarantee or counter-guarantee text, the governing law of a guarantee will be that of the place of business of the guarantor, and of a counter-guarantee will be that of the place of business of the counter-guarantor.
  • Article 35, jurisdiction, follows a very similar approach to that expounded upon in article 34.




More detailed information can be found in the module ‘Bank Guarantees - overview of the rules' at

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