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Who are the parties to the independent undertaking given in a bank guarantee?

A bank guarantee is an independent undertaking between the issuing bank and the beneficiary. Its enforcement depends on the terms of the guarantee, which is distinct from…

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Who are the parties to the independent undertaking given in a bank guarantee?

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Answer and explanation

Correct answer B

A bank guarantee is an independent undertaking between the issuing bank and the beneficiary. Its enforcement depends on the terms of the guarantee, which is distinct from the parties' underlying commercial agreement.

Option feedback

Option A

The creditor and principal debtor are parties to the underlying obligation. The bank gives the guarantee undertaking.

Option B

The issuing bank gives the undertaking directly to the beneficiary, subject to the guarantee's terms.

Option C

A buyer and seller may be parties to the underlying sale, which is distinct from the bank's undertaking.

Option D

An agent and sub-agent may be involved in an agency relationship, which does not identify the guarantee parties.

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