FINANCING SECURITY How to obtain financing

FINANCING & SECURITY How to obtain financing / credit ? - from a credit institution (bank, …) - from investors (‘equity’ or capital) - supplier’s credit n n - How to secure the credit you grant ? proprietary security, including R. o. T. , factoring, …. guarantees by a third party, incl. documentary l/c, credit insurance, … How to calculate the risk ? - Credit reporting n 1

Documentary credits n Purpose: to organise payment against delivery in international sales n Technique (simple case): - a bank - acting on instructions of a principal ( « applicant » , usually buyer) - undertakes an obligation to pay a beneficiary (usually seller) - against delivery by the beneficiary of the agreed documents (including a document representing the goods*) - * concept of negotiable instrument: the right out of the document follows the right to the document (das Recht aus dem Papier folgt das Recht am Papier) 2

Documentary credits n - - Order of acts: Underlying contract (usually sale) determines the payment conditions – more specifically which l/c the buyer will have to obtain for the benefit of the seller before the seller ships Applicant (buyer) contracts with a bank to undertake a « credit » = issue such a l/c (in favour of the seller) Issuing bank issues a l/c; this is notified to the beneficiary (seller) Seller sends / ships the goods Seller presents the documents to the issuing bank (presentation) Bank examines the documents (examination, 5 days) and honours (pays) or refuses Bank reclaims payment from its client (buyer) (recourse) and transfers the documents to the client (against payment) 3

Documentary credits 4

Documentary credits - applicable rules n Conflict of law rule: 3 separate relationships. To each of them is applied its own lex contractus (chosen law; subsid. characteristic performance) (NB. Property rights in the goods are determined by the lex rei sitae) In the relationship issuer / beneficiary : - «Uniform customs & practices » (UCP), (privately) codified by ICC. Since 2007 version 600. - applicable by virtue of a reference in the contract or l/c; in some countries accepted as customary law; very succesful - but less in the USA (application of the UCC). - UCP do not regulate all issues; national law applies to other issues. - DCFR has a model law for all independent guarantees (incl. documentary credits) in Book IV. G Section 3. n 5

Documentary credits Bank - beneficiary n Legal effects between bank (delegated debtor) and beneficiary (usually seller) (performance relationship) n Art. 4 UCP ( « credits v. contracts » ) : - Independent from the relationship bank / applicant ( « provision relationship » ) (so-called abstraction) - Independent from the underlying relationship between applicant (usually buyer) / beneficiary (usually seller) ( «valuta relationship » , usually a contract of sale): « even if any reference is included in the credit » - « Separate » : determined only by its own modalities (next slide) 6

Documentary credits Bank – beneficiary n Legal effects of the l/c between bank and beneficiary (usually seller (cont. ): n In principle irrevocable (art. 7 b UCP) (analysed either as a contract or a binding unilateral promise) n In principle not transferable (infra, art. 38 UCP) (but beneficiary can transfer the proceeds, art. 39) 7

Documentary credits Bank - beneficiary n Legal effects of the l/c between bank and beneficiary (usually seller (cont. ): Duty to pay (or honour otherwise) only: - upon presentation* of complying documents (complying presentation); strict interpretation; detailed default rules in the UCP concerning the requirements for the various types of documents commonly required ( infra); conditions without stipulated documents are disregarded (art. 14 h), - and if presented before the expiry date, - and at the agreed place for presentation (or one of the places for presentation). * For electronic presentation, see the e. UCP supplement to the UCP n Standard for examination: art. 14 UCP. n Time for examination: according to 14 b, the period for examination is 5 days. n In case of refusal, duty to notify discrepancies to the presenter (art. 16 c) n 8

Documentary credits Bank - beneficiary n Independence is exceptionally set aside in case of manifest fraud. «Manifest» means: proven by present evidence (DCFR IVG-3: 105) n Undertaking to «honour» - modes for honouring the credit : a) immediate payment* (at sight), b) deferred payment (promise to pay with a term), c) by acceptance of a draft (bill of exchange) drawn by the beneficiary Alternative: undertaking to «negotiate» , i. e. purchase of a draft (bill of exchange) drawn on another bank. The issuer will pay in exchange for a draft. UCP 600, art. 6 c: «a credit must not be issued available by a draft drawn on the applicant» . Currency used in l/C’s in 2013: 80 % USD, 9 % Chinese Yuan, 7 % Euro. • n Effect upon the rights & obligations of the client: client can not attach (seize) the beneficiary’s right against the bank (case law) 9

Documentary credits - documents n n n n - Art. 5 « Banks deal with documents, not with goods » Documents dealt with in detail by the UCP: Commercial invoice (art. 18) Transport documents. More specifically: Bill of lading (cognossement) (art. 20) Charter party bill of lading (art. 22) Non-negotiable Waybill (art. 21) Multimodal transport document (art. 19), …. General requirement: transport document must be « clean » (art. 27) Insurance documents (covering the goods) (art. 28) Not defined in UCP but also frequently used: Storage certificates (issued by bailee) Certificates of origin, composition or quality, compliance with norms, etc. 10

Documentary credits Bank - applicant n Effects in the internal relationship applicant / bank (delegated debtor): - Contract for (financial) services determines which l/c the bank undertakes to issue Bank must notify applicant of the presentation of documents; has a duty of reasonable care in examining the documents (no stricter liability) (more detailed rules in art. 14 UCP); Must notify applicant of performance or refusal - After performance by the bank to the presenter: recourse of the bank against the applicant (DCFR IVG-3: 109: also secured by subrogation; Belgian law: no subrogation; bank usually not interested in subrogation) - Documents remain in the hands of the bank as security for reimbursement (recourse) 11

Documentary credits Beneficiary - Applicant n Effects in the relationship beneficiary (seller) / applicant (buyer) - Seller does not have to ship before l/c is issued - During the term for presentation: right to payment against the buyer is suspended (comp. UPICC 6. 1. 7 (2) and DCFR III-2: 108) - After undue payment: buyer must demand reimbursement from the seller (only) n Dispute settlement mechanism organised by the ICC: « DOCDEX » . Expert opinion (binding or not) in very short period of time by anonymous expert 12

Documentary credits n Complex forms – intervention of more than 1 bank Bank of (country of) the seller is merely an advising bank (see art. 9 UCP): - gives advice on required formulation of the l/c, - verifies the l/c issued (authenticity, conformity), - transmits the l/c of the issuing bank to the beneficiary; - may be authorised by the issuing bank to examine the documents and to honour; - agent of the issuing bank (no proper undertaking); - demands reimbursement from issuing bank after payment. n Bank of (country of) the seller «confirms» (confirming bank): own obligation (see art. 8 UCP); beneficiary has a joint and several right against both banks, but has to address the confirming bank first n Bank of (country of) the seller guarantees the obligation of the issuing bank: dependent personal security (suretyship), no independent obligation n Nominated bank (art. 12 UCP): merely an agent of the issuing bank n 13

Documentary credits n n n Particular forms: Transferable documentary credit: art. 38 UCP Back-to-back-credit: l/c on application by the seller for the benefit of its seller; second bank takes the first l/c as credit security. Effect: second bank in possession of the documents and demands reimbursement from the first bank on the basis of the first l/c. Revolving credit (with a ceiling): credit which can be used for several l/c’s. Each payment by the buyer is credited to the current account of the seller so that new credit can be drawn in favour of the seller. Red clause: bank is authorised to pay (or pay in part) in advance (before presentation) - usually upon presentation of a provisional document (eg a storage certificate) 14

Standby letters of credit n Standby l/c: n is rather a kind of independent guarantee (s. further), which can be called (demand) by presenting agreed documents (in principle proving the right to payment of the beneficiary). n Standard practices are codified in the « ISP » , now ISP 1998 15

Export financing n Distinction short-term credit (<2 y) / medium-term (2 -5 y) / long-term (520 y) n Export insurance: a form of credit insurance Often offered by government authorities (export guarantee department) Risks which are usually covered: commercial, political-social, financialmonetary Premium depends on country risk (risk assessment by country) No coverage in case of fault of the insured party itself - 16

Export financing n Export financing by public institutions (form of subsidy): OECD has adopted Guidelines ( « Arrangement » ) on officially supported export credits – to avoid unfair competition (now version October 2017) n Scope of application: official support for export outside the EU with a repayment term of 2 or more years n Support can be granted only if: - Buyer must pay min. 15 % before delivery (or obtain credit in its own country) (art. 10 a) - Max. repayment term 5 y. (possibly 8 ½ y) for export to richer countries, 10 y. for poorer countries (12 y. for big projects) (art. 11 - 13) - Rules concerning insurance premium - Minimum interest rates to be respected (art. 14 – 15, 19) - A ‘Sector Understanding’ excludes export credit finance for e. g. less A ‘Sector Understanding’ excludes environmentally friendly coal-fired power projects n 17

Export financing by supplier’s credit or by buyer’s credit (both by bank in exporting country) when exporting seller is obliged to grant credit to the buyer n Supplier’s credit (credit to exporter): - Often discounting bills of exchange drawn on the buyer*: bank pays supplier against bills of exchange drawn on the buyer (and accepted by the buyer); supplier remains liable to the bank in case the buyer does not honour the bill n Buyers’ credit: credit granted to the foreign buyer by a bank (in the country) of the supplier n * to be distinguished from credit granted by the buyer’s bank to the buyer by virtue of which the supplier (or holder) collects the bill of exchange with the buyer’s bank. 18

Credit security n Proprietary security Distinction: giving credit by delivering goods / credit by providing money. Eg reservation of title is granting credit by delivering unpaid goods but at the same time retaining title until payment (secured credit); retained rights of seller will have priority over rights granted by buyer n Proprietary security exists in many forms, varying from jurisdiction to jurisdiction: - sometimes only « fixed » on present assets, sometimes also by anticipation on future assets, sometimes on floating assets (stocks, receivables, …) - Sometimes only « possessory » security, sometimes also non-possessory, usually requiring instead registration or some other form of publicity - Rights to enforce also vary n 19

Credit security n Proprietary security n Models Influential American model: art. 9 UCC (ranking by notice filing, possible even in advance; functional criterium) General Model law in DCFR Book IX Proprietary security in movables (s. infra). Uniform Act on Security rights in the OHADA (incl. personal suretyship, security rights in movables and in land) ( « AUPOS » ) - 2016 UNCITRAL Model Law on Secured Transactions - 2009 UNIDROIT Geneva Convention on intermediated securities (EU decided 2009 not to ratify) (in force for USA, Switzerland Mauritius) - n - Applicable law - different aspects : Contractual relationship between the parties: lex contractus Proprietary aspects: lex rei sitae. Conflit mobile possible In case of insolvency often also application of the lex concursus 20

Credit security n - - Uniformisation ? Cape Town Convention 2001 (general framework + aircraft protocol (2013: ratified for EU (w/o Denmark) + 51 other countries, but Eu ratification not sufficient for member states law); in addition: - Luxemburg railroad protocol 2007; - Berlin Space Assets Protocol 2012): creates an ’international interest’ to be regsitered in the International Register EU Collateral Directive: security in financial assets (financial instruments and account money and bank loans). Directive only for relationships between financial institutions. Some Member states (as Belgium, UK) also apply it in other relationships. Ottawa Convention international leasing, infra. DCFR Book IX 21

Cape Town Convention

Proprietary security of the seller Reservation of title n n Seller’s security under Belgian law : Before delivery: right to suspend performance (effective against third parties) Termination for non-performance: proprietary effect under Belgian law if exercised before insolvency (even if debtor in possession at insolvency) After delivery and transfer of title still has a seller’s lien (privilege) on the goods (by operation of law) If stipulated, retention of title; effective in insolvency since 1998 Applicable law: lex rei sitae Extensions of retention of title (not widely recognised): Extended into the buyer’s right to payment after resale Extended into the product manufactured Broadened to other claims (all moneys clause) Harmonisation and recognition ? Model rules in DCFR IX 23

Proprietary security of the seller Reservation of title § Art. 10 Insolvency Regulation (2015/848): “The opening of insolvency proceedings against the purchaser of an asset shall not affect the seller’s rights based on a reservation of title where at the time of the opening of proceedings the asset is situated within the territory of a Member State other than the State of opening of proceedings. ” “The opening of insolvency proceedings against the seller of an asset, after delivery of the asset, shall not constitute grounds for rescinding or terminating the sale and shall not prevent the purchaser from acquiring title where at the time of the opening of proceedings the asset sold is situated within the territory of a Member State other than the State of the opening of proceedings. ” 24

Factoring n • • = Transfer (assignment) of rights to payment ( «receivables» ) for the purpose of financing and/or credit security*; factor may provide additional services to assignor Advance payment (with a discount) before maturity = financing Payment even if debtor in default = also credit security n « Master agreement » determines which receivables the factor undertakes to take over from the assignor and on which conditions (often credit line with a ceiling), and which costs factor deduces (commission, discount …) n Types of factoring: next slide 25

Factoring n Types of factoring n True factoring = No recourse factoring: factor bears the credit risk, except in specific cases where he has a right to recourse (against the assignor) : Assignment in bad faith (buyer already insolvent) Buyer refuses to pay because of non-performance of seller Some other risks not covered n Spurious factoring = recourse factoring: factor has recourse against the assignor when debtor does not pay. Rather a mandate to collect ( pro solvendo) + additional services. n Reverse factoring: factoring on the initiative of the debtor (looking for a factor who is willing to pay its suppliers immediately; the buyer thus obtains better conditions from its supplier). 26

Factoring n Assignment 27

Factoring International factoring n Was often a case of refactoring: the export factor assigns to an import factor (system of « indirect factoring » ). When factor present in both countries (international group) usually direct factoring. In case of indirect factoring a contract between both factors governs their internal relationship (who bears which risk) n n - Applicable law ? Different conflict rules for different aspects ! Factoring agreement: lex contractus Relationship with the debtor: lex causae Assignability (incl. effect of no-assignment clauses): lex causae Proprietary aspects (property rights in the receivable): different solutions possible (eg. lex causae, country of debtor, law of the factoring contract) - now often country of the assignor; but in Recast of the EU insolvency Regulation : country of ‘COMI’ of the debtor (centre of main interest). 28

Factoring n n n n n International factoring – uniformisation of the law ? Ottawa-convention 1988 on international factoring (into force in 9 countries, incl B, F, Germany, Italy and Russia) Scope of application: only assignment of receivables (right to payment of price) arising out of international sales Despite the name, it deals not with the factoring agreement but with the assignment Interpretation of the Convention: art. 4 (idem as CISG 7) One of the critical questions: effect of no-assignment clauses. Why do buyers stipulate them ? - can disregard notices of assignment (more certainty for payor) - maintain future rights of set-off National law often gives effect to such clauses. Even recent restrictions leave the 2 mentioned interests of the buyer untouched (eg German HGB) Ottawa Convention: no-assignment clauses are overruled (art. 6). But reservation in 4 countries (i. a. Belgium) 29

Factoring n Ottawa-convention 1988 on international factoring (cont. ) Relationship debtor – assignee: n The debtor of the assigned right (buyer) retains all other defences arisen out of the sales contract (provision relationship) (art. 9), incl. any set-off already available. n But in principle no right to reimbursement from the factor in case of nonperformance of the seller (with 2 exceptions in art. 10 (2) where there is a right to reimbursement against the factor: factor has not yet paid assignor or paid only after knowing of the non-performance). n Art. 8 determines under which conditions the debtor is under a duty to pay the assignee (instead of the seller): if notified by the supplier (or with his authority) in writing and no older right has been notified earlier. n 30

Forfeiting: n Comp. a no recourse factoring for a single transaction n Supplier assigns its right to payment against the buyer to a forfeiter; - usually by endorsing* bills of exchange drawn upon the buyer for successive terms of payment (usually every 6 months during 2 to 5 year) - Forfeiter will pay the bills with deduction of the discount + commission n n Forfeiter bears the credit risk and waivers its recourse against the drawer (exporter) (NB. Under the Geneva Convention on Bills of Exchange such a waiver cannot be binding upon any other holder of the bill) * Endorsing = signing on the back ( « en dos » ) 31

Leasing Finance leasing: 3 party operation: - The (prospective) user negotiates with a supplier the sale of equipment - Leasing contract between the user as lessee and a financer as lessor - Lessor buys upon instruction of the lessee and becomes owner(= security) - Lessee leases for a fixed term. Usually with an option to purchase at the end of the term (for the residual value) n Leveraged leasing: - Lessor itself is partly financed by a bank (investment credit granted by bank to lessor); - lessor assigns the rights to payment against the lessee to the bank (by way of security assignment); - sometimes additionally a security right in the equipment. n Sale and leaseback (2 parties): owner sells for cash and then leases back n 32

Leasing n Risks in international leasing ? Especially recognition of proprietary rights (lex rei sitae) Uniform rules ? n International leasing: also an Unidroit Convention Ottawa 1988 (in force in 10 countries) n Unidroit model law 2008 n n Unidroit Ottawa Convention 1988: n Scope of application: « international » & « leasing » (art. 1) Proprietary & insolvency aspects - Recognition of the right of ownership of the lessor (art. 7) - But states may require filing/registration (7 II) n 33

Leasing n Unidroit Convention Ottawa 1988 n Obligations of the parties: Lessee may refuse to accept equipment in case of non-conformity (and terminate contract if not remedied) (art. 12) But the lessor is not liable in respect of the equipment (art. 8); lessee must go directly against the supplier (on the basis of the sales contract). Lessee cannot terminate the sales contract without consent of the lessor, but has other remedies (art. 10) Duty of the lessee to take proper care of the equipment (art. 9) Remedies in case of default (non-payment) of the lessee, including possibility of termination (art. 13) Lessor may assign its rights, but remains liable for its obligations (art. 14) Lessee may transfer its rights only with consent of lessor (art. 14) - - 34

Project financing n - Very large projects entail specific risks for financer; apart form the credit risk also exploitation risk, market risk, exchange risk, political risks. . . Output of the project is essential. for exchange risks, see Ch. 10 for other risks: often insurance possible alternative risk transfer (including credit default swaps, catastrophe bonds etc…) n Esp. Infrastructure + operation (airport, railway, power plant, offshore wind farm or oil platform, etc. ) n A particular form is BOT ( « build operate transfer » ): foreign supplier (or consortium of suppliers) participates in the capital of the exploitation company (at least initial years) n UNCITRAL Model Legislative Provisions on Privately Financed Infrastructure Projects 35

Project financing n Financing: n Often financed by a syndicate of suppliers and/of financial institutions ( « syndicated loans » by a syndicate or consortium of banks became customary since the 1960’s). Influential standard contracts from the London LMA (Loan Market Association). They will then ‘place’ the loan on the market. Some companies can issue bonds themselves (direct appeal to the capital markets); they may try to collect capital by issuing shares (equity) Bonds may be specifically ‘covered’ (by security rights …) Bonds may contain ‘collective action clauses ‘ (minority of bondholders bound by majority decision) (esp. important in sovereign debt) n n n 36

Project financing n Environmental and social risk ? Equator Principles (World Bank) (version III, June 2013) = credit risk management framework = for determining, assessing and managing environmental and social risk in project finance transactions (used by financing institutions) > risk categories A, B, C (A= substantial risk) n Accepted by many financial institutions, covering the major part of international project financing in emerging markets (over 70 %) n 37

Project financing n Financers try to limit risks by different structures or techniques, eg: - Preliminary studies: feasability studies + sensitivity analysis (how sensitive the project is in case economic parameters change) Security provided by or on behalf of sponsors (states or international institutions); eg: completion guarantee, cost overrun undertaking, repayment guarantee, etc. Long term unconditional commitments from buyers (possiby incl. suppliers of materials) to purchase the products or services; purchase obligations possibly guaranteed by security. May include a take-or-pay contract (TOP). Contract manufacturing (tolling agreement): products manufactured are property of the supplier / financer who sells them to purchasers (possibly with a long-term purchase agreement) - - - n Eg. Eurotunnel 38

Independent guarantees n n n - Independent guarantee: 3 party relationship (type delegatio solvendi) Underlying contract requires the debtor to obtain a guarantee On application of that debtor, bank (guarantor) issues a guarantee*: in the form of a (conditional) promise to pay a sum of money to a beneficiary on demand by the beneficiary made in conformity with the terms and conditions of the guarantee, normally incl. at least a declaration that the debtor defaults on its obligations (supporting statement) Independent from the underlying contract (the valuta relationship, such as sale, construction contract, etc) Independent from the internal relationship between bank and applicant/principal (the provision relationship, a financial service contract). * demand guarantee, performance bond, indemnity, in UK not ’guarantee’ or ‘bank guarantee’ (as this is a form of dependent suretyship) 39

Independent guarantees n Independent guarantees 40

Independent guarantees n Examples: - Tender guarantee (bid bond) Performance bond Advance payment guarantee = repayment guarantee Maintenance guarantee Payment guarantee Retention money guarantee - 41

Independent guarantees Applicable rules n Conflict of law rule: chosen law, otherwise place of guarantor. . . n UN (UNCITRAL) Convention independent guarantees & standby l/c (not very successful, in force in 8 countries) n Standard conditions drafted by the ICC: - Uniform rules for demand guarantees (URDG) (v. 758 replaces v. 458 since 1 July 2010), better coordinated with UCP - applicable if the guarantee refers to them (art. 1 URDG); - default rules ( « except so far as the guarantee modifies or excludes them » ); - not yet sufficiently succesful to be considered as customs; - can be used for domestic or international relations n National law remains applicable by default or where mandatory. Art. 34 URDG contains choice of the country where issued n International Standby Practices (ISP 1998) n 42

Independent guarantees n Main rules in the URDG (NB. Wording in v. 758 aligned with UCP) - Issued on demand of a principal/applicant (or its agent - the instructing party) (definitions of parties in art. 2) Binding as soon as it leaves the control of the guarantor (art. 4 a) Irrevocable (art. 4 b) Guarantee not transferable (unless otherwise agreed) (art. 33) (variations in national law as to the effect of such a no-assignment clause; most national restrictions of the prohibition concern only receivables – comp. discussion under Factoring) Independent from any other relationship (art. 5); guarantor deals with documents, not with goods (art. 6); disregarding conditions which are not documentary (art. 7) with a list of exceptions (esp. externally verifiable facts or index) If no expiry date, expires after 3 years (art. 25 c) (in the UN Convention 6 years) - - - 43

Independent guarantees n Relationship guarantor – beneficiary: - Payment requires presentation of a written « demand » and documents specified in the guarantee usually at least a declaration by the beneficiary that the principal is in breach of obligation, art. 15 URDG – « supporting statement » , unless the guarantee is explicitly merely « on first demand » guarantee may contain further conditions for demand (if further documents are required, usually called a standby l/c). Art. 8 URDG ( « content of instructions and guarantees » contains a checklist Thus the default rule is a guarantee on motivated demand (>< guarantee on simple demand) - - - 44

Independent guarantees Relationship guarantor – beneficiary (cont. ) n Procedure - presentation of the « demand » before expiry date ( presentation, art. 14 ff. ) - partial demands and multiple demands are possible (art. 17) - guarantor must inform the applicant/principal (art. 16) and transmit copies of a complying demand (art. 22) - examination by guarantor with reasonable care (art. 19) whether it appears to be on its face a complying demand - within 5 working days (art. 20 a) (in UN Convention 7 days) - in case of a demand « extend or pay » , guarantor may wait 30 days (art. 23) - in case of complying demand: pay (art. 20 b) - in case of refusal to pay: notify beneficiary (art. 24) stating reasons for refusal (discrepancies) – otherwise guarantor must pay ! - payment in the indicated place (art. 20) n 45

Independent guarantees n Effects in the internal relationship between applicant/principal and guarantor: - Contract between applicant/principal and beneficiary determines which guarantee the guarantor will issue (useful checklist in art. 8); duty of bank to inform/advice applicant/principal before that is determined Duty of guarantor to inform applicant/principal in case of demand (art. 16 and 22 URDG) Duty of reasonable care in examination of the demand (art. 19 URDG) No extension of term ( « extend or pay » ) without consent of the applicant/principal (art. 23) After payment: recourse against the applicant/principal (under Belgian law traditionally no subrogation) - 46

Independent guarantees Complex guarantees, esp. with counter-guarantee: - bank of the applicant/principal issues a guarantee in favour of the bank of the beneficiary (corresponding bank); - corresponding bank issues a guarantee in favour of beneficiary. First guarantee is a « counter-guarantee » . - guarantee and counter-guarantee are independent from each other (art. 5) n n Possibility of an advising bank (on the side of the beneficiary) (art. 10 URDG) 47

Independent guarantees n - Refusal c. q prohibition to pay (stop-payment order) is possible in the following situations: Guarantee conditions not fulfilled Underlying contract (valuta relationship) manifestly contrary to the (international) public order Manifest fraud Manifest abuse of right. - Fraud is more specifically described in art. 19 Uncitral Convention - Provisional order possible of « highly probable » on the basis of « immediately available strong evidence » (art. 20 Uncitral convention) - Comp. Also DCFR IVG-3: 105. - 48

Accessory guarantees n E. g. Uniform Rules for Contract Bonds (URCB): Terms used: surety bond, guarantee (wthout the word ‘demand’). Often a guarantee by an insurer Comparable to suretyship (dependant personal security); the obligation is dependent upon the valuta relationship (between main debtor and creditor). 49

Accessory guarantees 50