Less successful was the Institute’s venture into performance bonds and guarantees, with the issue in 1978 of the Uniform Rules for Contract Guarantees.1 Drafted with the laudable aim of curbing unfair calling of on-demand guarantees and performance bonds, the 1978 Rules, though used in some quarters, proved too far removed from market practice and the realities of negotiating power to gain general acceptance. The main stumbling block to the acceptance of the rules was the requirement of production of a judgment or arbitral award as a condition of obtaining payment, a condition which in large measure undermined the raison d’être of the demand guarantee as a substitute for the cash deposit in providing the beneficiary with cover against non-performance. The 1978 Rules also possessed a certain conceptual ambivalence, failing in the introductory provisions to make it clear that the Rules were confined to documentary guarantees2 and did not apply to suretyship bonds.

After a decade of experience with the 1978 Rules, the I.C.C. decided on a fresh approach to the question of documentary guarantees and set up a Joint Working Party of the Commission on Banking Technique and Practice and the Commission on International Commercial Practice to produce a new set of rules to replace I. C.C. No. 325. Over a period of some two years the members of the Working Party were able to reach agreement on most of the provisions of a new draft but were unable to resolve an impasse on the crucial question of the documentary