Type of paper: Research Paper

Topic: Warranty, Principal, Banking, Beneficiary, Ethics, Money, Law, Obligation

Pages: 8

Words: 2200

Published: 2021/02/01

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Introduction

Each commitment is based on the creditor’s belief in the future that the debtor pursuant to the actions necessary to meet the interests of creditor. Proper execution of civil legal obligation to ensure that measures of civil law enforcement in the form of a liability measures or safeguards.
The practice of economic turnover showed and shows that the application of state-of coercive measures and other legal tools designed to protect the interests of any of the authorized person, in many cases is insufficient to meet the property interests of a creditor whose rights have been violated by the failure or improper performance by the debtor. Thus, the decision of the court for enforcement of the debt may be unenforceable due to the absence of the debtor of any property. As a result, in the mechanism of civil regulation are used legal means, whose designs were created in different legal systems specifically for the enforcement of obligations. The civil laws enshrining these designs, as a general rule, are combined in a special institute to enforce the obligations.
The Civil Code of many countries, along with traditional methods of enforcing obligations (mortgage, a penalty, deposit), contains the concept of a bank warranties. The aim of this paper is to discuss the bank warranties as a way to enforce the obligations.

Body

According the concept of the warranty, “the bank or another credit institution or insurance company (the guarantor) provide, at the request of another person (the principal) a written obligation to pay the principal's creditor (beneficiary) under the conditions given by the guarantor liability sum of money upon presentation of a written request by the beneficiary of its payment” (Hogg, M., 2011). The subjects of relations of the bank warranty are a guarantor, principal and the beneficiary. Guarantor is a person who has issued a written document containing an obligation to pay a sum of money in case of submission by the beneficiary of a written demand for payment, drawn up in accordance with the terms of the bank warranty. Principal is a person who is a debtor of the obligation, the performance of which is provided by a bank warranty, the guarantee was issued at his request. The beneficiary is the person in whose favor, as a creditor of the principal, issued a bank warranty.
Guarantors may be banks and other credit institutions and insurance companies, i.e. the organizations which have a special personality. Principals and beneficiaries can be both enterprises and individuals. The issuance of a bank warranty is a one-sided deal, because, firstly, to its conclusion requires the will of one hand - the guarantor; secondly, the issuance of bank warranty legally binds the guarantor of the possibility of bringing the beneficiary demands execution of an obligation arising out of it. Legal coherence guarantor arises as a general rule since the issuance of bank guarantees, for it shall come into force from the date of issuance, unless otherwise provided herein. As “otherwise provided” can be stated that the bank warranty shall be considered as active at a specified date, or upon issuance of the beneficiary of the loan principal, or from the receipt of the written consent of the beneficiary to accept safeguards, and so on.
The essence of the bank warranty is that it is the obligation of the written form, according of which the principal creditor - the beneficiary acquires the right to require money. As the issuance of bank warranty should be understood transfer guarantor in some way (by mail, teletype, directly on the hands and so on.) a duly executed warranty to the principal or beneficiary. The issuing of the warranty is a legal fact, generating warranty between the beneficiary and the guarantor. For the emergence of a warranty is not required notification of acceptance by the beneficiary of the guarantor guarantees, unless otherwise expressly provided in the text of the warranty. The main legal sign of a bank warranty as security transaction is the independence of the bank warranty from the principal obligation, to secure the fulfillment of which it was issued.

The absence of accessory of a bank warranty in relation to the main obligation means that it:

- Does not end with the termination of the principal obligation and does not change with a change in his;
- Is not invalidated when invalidate the main secured obligation;
- Does not guarantee the right to rely upon presenting to him the beneficiary's objections, which are related to the secured obligations;
- Does not make the validity of the guarantor's obligation to the beneficiary in relation to any claims or defenses of the principal, based on the relationship with the guarantor or the principal beneficiary;
- Establishes that the obligation of the guarantor to pay a sum of money should be performed by repeated request of the beneficiary, even in cases where the obligation secured by a bank warranty, in whole or in part is already done, stopped for other reasons, or is invalid.
Issuance of a bank warranty is the result of requests to meet principal guarantor of a bank warranty. Thus, the basis for issuance of bank guarantees is just a request of the principal. In the development of commercial circulation request the principal to grant warranties and conditions comply with the request be determined by agreement of the guarantor and principal on the procedure and conditions for issuance of bank warranties. But it should be borne in mind that the law does not contain any regulations on mandatory written agreement between the principal and the guarantor. Therefore, the absence of a written agreement to issue a bank warranty between the principal and the guarantor shall not entail the invalidity of the warranty obligations of the guarantor to the beneficiary. But if the request for the extradition of the principal guarantees conditions comply with the request be determined by agreement of the guarantor and principal on the procedure and conditions for issuing a bank guarantee, it is such an agreement becomes the basis of determining the order of issuance of the warranty, the guarantor and the principal settlements on interest payment to the guarantor, the guarantor of the right of recourse to the principal, its scope and procedure implementation.
The content of the agreement and the principal guarantor of a bank warranty are determined by mutual consent. The main thing in this agreement constitutes the terms of commitments to extend warranties for the benefit of the principal, on the order of satisfaction of the written request of the beneficiary, the remuneration payable to the guarantor, the conditions and the amount of the recourse liability of the principal. For the issuance of bank warranty a principal pays guarantor a fee. In the law there are no rules to determine the amount of such compensation and the procedure for payment. Therefore, these issues must be addressed in the agreement to issue a bank warranty, concluded between the guarantor and the principal. The lack of agreement on the terms of a bank warranty for payment of the principal guarantor of remuneration and the conditions that determine the size and order of payment of such compensation cannot be regarded as grounds for invalidation of the bank warranty. The fact is that the extradition treaty guarantees concerns the relationship of principal and the guarantor, but not guarantor and beneficiary (Slawson, W, 1996).
The right of guarantor to require from the principal the amounts paid to the beneficiary of the bank warranty is determined by agreement with the principal and the guarantor, pursuant to which the warrant was issued. Therefore, the agreement on the issuance of bank warranty, the guarantor and the principal must, in order to avoid future uncertainty recourse obligations of the principal guarantor before, agree on the terms of the right to require the principal guarantor of recourse recoveries of amounts paid to the beneficiary of the bank warranty, and the scope of that right. In determining the amount of recourse principal and the guarantor must resolve the question of the possibility of a guarantor to demand recourse sums of money paid by the guarantor to the beneficiary in accordance with the terms of the warranty, such as for violation of the guarantor's obligation to the beneficiary. If this condition is not agreed, in accordance with the general rule dispositive norms guarantor will not qualify for a refund of these amounts.
The obligations of the guarantor must be executed in writing. In contrast to the rules governing the relations of warranty, penalty, pledge and indicates that failure to comply with the written form of transactions on the application of these methods involves ensuring their invalidity of a bank warranty for the current legislation such consequences of non-written form not expressly provided for. The very essence of a bank warranty is that it is the obligation of the written form, by virtue of which the principal creditor - the beneficiary acquires the right to require money. Therefore, a bank warranty is always the document, completed in writing (including electronic documents, telegrams, telex and facsimile). In this regard, the texts guarantee as well as other documents relating to it should be clear, precise and avoid controversies.
Bank warranties can be classified according to various criteria (McKendrick, E., 2007).
1.Tender warranty - issued at the request of the tenderer, who announced bids, and ensures the implementation of the bidder with its obligations arising from the tender offer presented to them;
2. The fulfillment of obligations warranty - issued at the request of the supplier of goods or services (contractor or any other person) to the buyer (customer), as security for the proper performance of the supplier of contract (contract) between the supplier and the purchaser;
3. Advance payment warranty - issued at the request of the supplier of goods or services (contractor or any other person) to the buyer (customer), usually in the amount of the advance payment received by the supplier under the contract (contract) between the supplier and the buyer, and provides a refund of the amount paid advance;
4. Payment warranty - issued at the request of the buyer (customer) in favor of the seller (supplier of goods or services of the contractor) and provides the Buyer's obligations to pay for goods delivered (services) in accordance with the contract (agreement) between the seller and the buyer;
5. Loan repayment warranty - issued at the request of the borrower's organizations to provide credit, and ensures that the borrower's obligations to the lender to repay the principal and / or interest on the loan within a specified time;
6. Tariff warranty - issued for the customer responsible for payment of customs duties, in order to secure the payment of customs duties to clients set rates and terms, as well as installment / deferred payment of customs duties.
The fulfillment of the obligations arising from the bank warranty starts with the presentation of the guarantor beneficiary claim for payment a sum of money in the banking warranties. The requirements of guarantor must be submitted in writing to the application specified in the warranty documents. The request or annexed thereto beneficiary must indicate what is the violation of the principal of the principal obligation secured by the warranty.
When you receive a warranty claim shall immediately notify the principal of the receipt of the beneficiary's claim and submit a copy of the principal requirements with all related documents. This obligation is playing a very important role in the relationship of the guarantor and the principal. Its performance is included in the presentation of a guarantor of recourse against the principal. Only the performance of the guarantor of its obligations under the terms of its agreement with the principal warranty issuance is certain grounds for satisfaction recourse against the principal guarantor. The guarantor must consider the beneficiary's claim with the attached documents within a reasonable time and to exercise due diligence to determine whether it complies with the requirement and the documents attached thereto warranty. Under the reasonable time within which the guarantor is obliged to verify the documents and answer their acceptance or rejection, the term should be understood, developed in the form of custom. Installing the legislator on the reasonableness of the life of the document check does not interfere with its specific definition of a warranty. In reviewing the documents submitted by the beneficiary, the guarantor is not obliged to check whether the actual circumstances of the documents, but is obliged to check them for compliance with the terms of the warranty. If the beneficiary's claim or the attached documents do not meet the terms of the warranty or the guarantor are presented at the end of the period specified in the warranty, the guarantor fails to meet the beneficiary requirements. Guarantor fails to pay, unless the beneficiary submitted documents that the violation by the principal of the principal obligation is not the violation of which, in accordance with the terms of the warranty gives the right to demand payment from the guarantor.
Guarantor shall immediately notify the beneficiary rejecting his claim. The business turnover is assumed that, informing the beneficiary's refusal to meet the requirement, the guarantor shall inform the beneficiary of the reasons for the refusal. In any case, the beneficiary is entitled to demand such an explanation, because it is a refusal to satisfy its rights. After correcting the errors and defects in the documents on which the guarantor reject the claim, the beneficiary has the right to re-submit the guarantor requirement for payment, provided that the requirement stated before the end of the warranty period. Eligible for re-payment claims in these and similar cases, stems from the fact that the mere failure of a guarantor to pay a sum of money does not mean the end of the warranty obligations and does not stop the beneficiary's right to demand payment of a sum of money provided by a bank warranty. The presentation of the beneficiary requirements to the guarantor must be done before the end of the specified in the warranty period for which it was issued.

Conclusion

Summing up the bank warranty as a way to enforce the obligations we can draw certain conclusions. Firstly, this method is an innovation for the modern civil law, which explains its relative unstudied and popularity in public circulation. But at the same time it should be noted that the bank warranty is quite solid way to ensure fulfillment of the obligations, and this is its main attraction for creditors.

References

Hogg, M. (2011). Promises and contract law: Comparative perspectives. Cambridge: Cambridge University Press.
McKendrick, E. (2007). Contract law (7th ed.). Basingstoke: Palgrave Macmillan.
Representations & warranties in acquisition documents. (2011). Mechanicsburg, Pa.: Pennsylvania Bar Institute.
Slawson, W. (1996). Binding promises: The late 20th century reformation of contract law. Princeton, N.J.: Princeton University Press.

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WePapers. (2021, February, 01) Warranties Research Papers Examples. Retrieved October 25, 2021, from https://www.wepapers.com/samples/warranties-research-papers-examples/
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"Warranties Research Papers Examples." WePapers, Feb 01, 2021. Accessed October 25, 2021. https://www.wepapers.com/samples/warranties-research-papers-examples/
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Warranties Research Papers Examples. Free Essay Examples - WePapers.com. https://www.wepapers.com/samples/warranties-research-papers-examples/. Published Feb 01, 2021. Accessed October 25, 2021.
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