Principal

In foreign trade, 'Principal' typically refers to the party in customs matters who provides security to customs to guarantee the performance of related obligations, such as an importer, exporter, or their agent. This term is commonly used in customs guarantee systems, such as processing trade deposits and temporary import/export guarantees. The Principal bears legal responsibility for compliant declaration of goods and payment of duties. Unlike the 'Guarantor', the Principal is the obligated party, while the Guarantor provides joint and several liability guarantee. Note: In letter of credit business, Principal also refers to the applicant, but in Chinese it is often translated as 'applicant' rather than 'Principal', and must be distinguished by context. When using, the scope of guarantee, duration, and recourse clauses should be clearly defined to avoid legal risks due to unclear responsibilities.