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ICC (International Chamber of Commerce ) Rules for guarantees and Standby Letter of Credit

There are three sets of ICC rules which are related to guarantees and standby letter of credit -

1. Uniform Rules for Demand Guarantees (URDG 758) is intended for use in case of demand guarantees, but it may be used for standby letter of credit also.
2. International Standby Practices (ISP 98) are rules made primarily for standby letter of credit, but it may be used for demand guarantees also. This was initially prepared by International Banking Law and Practice (IIBLP) which were later adopted and published by ICC.
3. Uniform Customs and Practice for Documentary Credits (UCPDC 600) is primarily intended for documentary credits, but can also be used for standby letter of credit. This is not suitable for use in case of a demand guarantee.

The rules are intended to provide an answer to situations of which the guarantee wordings are silent.

The choice of the rule usually depends on the preference of the bank and also the applicant and beneficiary.

Though these rules are present, a large number of guarantees are issued without any rules at all. 

In such cases the instrument is solely subject to the wordings included in it. Thus many situations that may arise during the lifetime of the instrument like extension of the expiry date, or time to examine a demand etc then may be separately mentioned in the wordings of the instrument which otherwise would have been covered by the ICC rules if the guarantee followed the rules.

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