URDG 758: what a demand must contain
Independence first
A demand guarantee that incorporates URDG 758 is independent of the underlying contract. Article 5 says the guarantor deals with a presentation, not with whether the contractor actually defaulted in the way the beneficiary claims. The applicant’s email that the project is on time is not a defence inside the examination. It may be a reason to talk to the applicant under Article 23 if the demand also asks for an extension. It is not a reason to ignore a complying demand.
Article 15’s statement
A demand must be supported by any other documents the guarantee specifies and, in any event, by a statement indicating in what respect the applicant is in breach of its obligation under the underlying relationship. The statement can sit in the demand itself or in a separate signed document accompanying or identifying the demand. Article 1 lets a guarantee modify or exclude a rule. Unless it does so in clear words, the statement is required. A demand that only says “please pay” is incomplete.
Five business days
Article 20 gives the guarantor five business days following the day of presentation to examine the demand and decide whether it complies. The period is not cut because the guarantee would expire during those days. This is a business-day count. It is not UCP 600’s five banking days, and it is not ISP98’s “not unreasonable” notice period. Use the rule named in the instrument.
Extend or pay, expiry, and force majeure
Article 23 applies when a complying demand includes, as an alternative, a request to extend the expiry. The guarantor may suspend payment for not more than 30 calendar days after receiving the demand. If the extension is granted in that time, the demand for payment is treated as withdrawn. If it is not granted, the complying demand is paid without a further demand. Article 25: a guarantee that states neither an expiry date nor an expiry event ends three years after issue. Article 26 is force majeure. If presentation or payment is prevented and the guarantee would otherwise expire, it is extended for 30 calendar days from the date it would otherwise have expired. Examination time already running is suspended until business resumes. That is not extend or pay.
Calling it a performance bond
Bangladesh facilities are often labelled performance bonds, bid bonds, or bank guarantees. The label does not choose the rules. If the text says URDG 758, examine under URDG. If it says ISP98, use ISP98. If it is a local guarantee with no ICC rules, do not pretend Article 15 applies. Say which text you read. This page does not approve a claim and does not set the cash margin for issuing a guarantee. Margin, where a circular imposes one, is a Bangladesh Bank question and is not a single percentage in FEPD-1 Circular No. 30.
Source
ICC, URDG 758, Articles 15, 20, 23, 25 and 26. Operational summary, not a reprint. iccwbo.org. Open the cited source.
Frequently asked questions
What must support a demand?
Article 15: the documents the guarantee requires and, in any event, a statement of the respect in which the applicant is in breach. The statement may be in the demand or in a separate signed document that accompanies or identifies the demand.
How long does the guarantor have to examine?
Article 20: five business days following the day of presentation. Expiry during that period does not shorten it.
Is extend or pay the same as force majeure?
No. Extend or pay is Article 23. The guarantor may suspend payment for not more than 30 calendar days. Force majeure is Article 26. It can extend a guarantee for 30 calendar days from the date it would otherwise have expired.