Comparative Study of the Legal Nature of On-Demand Guarantees and Guaranteed Letter of Credits in Domestic Law and International Trade Law

Standby Letter of Credit is one of the tools that has gained more significance in the Banking Law field over the past decades. Nevertheless, this tool has not been adequately studied in many countries, including Iran. Thus, its role and status remain unclear. Considering the increasing importance and advantages of using this commerce tool, it proves necessary to study it carefully. After careful study of the Standby Letter of Credit's peculiarities, this research compares it with a similar tool, namely Demand Guarantee. Due to these tools' similar functions, which both guarantee the risks of transactions, it is imperative to delineate their differences carefully. In this research, we have tried to clarify the similarities and differences in the legal regimes governing the two types of documents, both from procedural and substantive angles. In conclusion, it seems that Standby Letter of Credit has many of the advantages of Demand Guarantee, and in some aspects, it has even more advantages, since there is no dispute on the admissibility of the principle of independence regarding them. Moreover, despite many similarities, we should consider the Standby Letter of Credit as an entirely different tool. Promulgation of separate regulations under the title of international provisions governing Demand Guarantee supports this idea. It should be noted that the article has been written in a descriptive-analytical manner