PERFORMANCE SECURITY: BONDS, GUARANTEES AND …

Asia Pacific Projects UpdatePERFORMANCE security : BONDS, GUARANTEES AND LETTERS OFCREDITKEY CONTACTSAlex GuyPartner, Finance & ProjectsT+61 7 3246 PapailiouSenior Associate, Finance & ProjectsT+61 7 3246 considering PERFORMANCE security requirements tosupport project contracts, parties often wonder what formof PERFORMANCE security is appropriate - a performancebond, parent company guarantee , financial institutionguarantee or letter of credit. Each of these instruments isused to achieve the same goal, namely to increaseconfidence and manage risk between the parties in orderto facilitate the underlying transaction. However, eachinstrument carries nuances that may impact upon itsoperation and utility, and therefore its appropriateness indifferent commercial issues were brought into sharper focus followingthe UK Court of Appeal's decision inWuhan GuoyuLogistics Group Co Ltd, Yangzhou Guoyu ShipbuildingCo Ltd v Emporiki Bank of Greece1(Wuhan Case).

The form of a general LOC is standardised by the Uniform Customs & Practice or Documentary Credits 2007 (UCPs) published by the International Chamber of Commerce. The UCPs are usually expressly incorporated into the terms of an LOC. In some instances it may be more appropriate to adopt other rules such as the ICC's Uniform Rules for Demand ...

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  Performance, Security, Practices, Uniform, Bond, Custom, Guarantee, Performance security, Guarantees and, Uniform customs

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