Bank Guarantee and the Counter-guarantee as a Means of Implementing the Principles of Private Law in Business Legal Relations in Georgia

Abstract

The bank guarantee, as a mechanism for protecting the contractual interests of the beneficiary, must ensure the protection of the interests of the subjects of law within reasonable limits. It should reduce the risks existing in civil turnover. The mentioned institution is indirectly related to the fulfilment of the obligations by the parties, and in the conditions of each specific legal relationship, it somehow determines the possibility of implementing the general principles of private law. In civil legal relations, non-fulfilment of obligations is a risk, which is also related to the protection of civil law principles, including the principle of good faith. In order to implement the legitimate purpose of the existence of the bank guarantee as a legal institution in practice, it is necessary to analyze its function. At the moment, the regulatory norms of the bank guarantee existing in the Civil Code of Georgia are characterised by a general nature and cannot comprehensively regulate all problematic issues. The Code does not regulate the types and purpose of the bank guarantees. The institution of counter-guarantee is also left without regulation. Considering the above, the perfection of the legislative base regulating bank guarantees is important from both theoretical and practical points of view. The issue becomes particularly relevant in the case of business-legal relations. For the relevant segment, the goal of avoiding disputes, which helps to save time and financial resources, is particularly valuable. In addition, this is closely related to the issue of performance of obligations, which is of central importance in civil law. Accordingly, this paper aims to analyze this issue, based on the study of unified law and national legislation.