Incorporation comes first
URDG 758 applies to a demand guarantee or counter-guarantee only when the instrument says it is subject to URDG 758. A commercial contract, tender or website reference does not incorporate the rules into a separate bank instrument.
The guarantee should clearly identify the applicant, beneficiary, guarantor, amount, currency, expiry, presentation place, required demand statement and any supporting documents.
The core structure
A demand guarantee is independent from the underlying sale, tender or performance contract. The guarantor examines a demand against the guarantee's terms and the incorporated rules, not the merits of the underlying dispute.
Independence does not mean that every demand succeeds or that mandatory law is irrelevant. Presentation wording, timing, place, documents, fraud allegations, injunctions and local law can matter. Parties should obtain bank and legal review before issuance.
Common uses
- Bid security required by a tender
- Performance security after contract award
- Advance-payment security where a seller receives an advance
- Other demand-backed obligations agreed by the parties
The required amount, validity and calling conditions come from the tender or contract. They are not fixed by Sarpah or by a universal market percentage.
Counter-guarantees
In a counter-guarantee structure, one bank supports another bank that issues the beneficiary-facing guarantee. The two instruments are distinct and should identify their respective parties, expiry, presentation and governing framework. A counter-guarantee should not be described as confirmation of the first guarantee.
Demand guarantees and standby credits are distinct
A standby letter of credit can support a similar commercial risk and may expressly incorporate ISP98 or, to the extent applicable, UCP 600. It remains distinct from a demand guarantee governed by expressly incorporated URDG 758. The parties and banks should choose and draft the instrument deliberately.
Review checklist
- Express incorporation of URDG 758
- Correct legal names and capacities
- Amount, currency and reduction mechanics
- Expiry event or date
- Presentation place and method
- Required statement and documents
- Extend-or-pay wording, if used
- Governing law, jurisdiction and mandatory-law issues
- Alignment with the tender or underlying contract
Sources and professional review
ICC publishes the rulebook and related Banking Commission opinions and DOCDEX information. Use the current official text and obtain review from the prospective guarantor or issuing bank, as applicable, and from legal counsel for the actual instrument.
Sarpah's role
Sarpah can coordinate commercial information and instrument milestones. We do not issue, draft, approve or promise payment under a guarantee.