A bank guarantee is a document issued by a bank whereby the bank undertakes certain obligations toward the beneficiary. It plays a significant role in securing transactions, particularly in contractual and governmental agreements. Based on conducted analyses, it can be concluded that the legal structure of guaranty is not a suitable framework for bank guarantees. Most legal scholars, and even judicial practice, do not consider bank guarantees to fall under the legal concept of guaranty, and there are strong and well-founded arguments supporting this view.
Undoubtedly, one of the essential elements of the guaranty contract is the existence of a debt or the cause thereof at the time the contract is concluded. However, in bank guarantees, the guarantee is generally issued for a potential or future obligation, and in some cases, no debt exists at all. Rather, the guarantee serves as security against non-performance or improper performance of the contractual obligations.
Moreover, a bank guarantee is a form of banking and commercial instrument, and due to its commercial nature, it possesses specific characteristics—most notably the intention to profit—which are absent in traditional guaranty contracts.
It will be further analyzed that, under Iranian law, bank guarantees can be categorized as a form of private contract governed by the Civil Code.