Guarantee Termination

Termination of a letter of guarantee refers to the act by which a bank or guarantor, in accordance with the terms of the guarantee or relevant legal provisions, releases its payment liability under the guarantee and extinguishes the legal effect of the guarantee under circumstances such as expiry of the guarantee's validity period, completion of obligations, or application by the applicant or beneficiary. Use cases include: completion of the underlying contract, expiry of the guarantee, written consent by the beneficiary to release, court judgment ordering termination, etc. Points to note: termination must comply with the conditions stipulated in the guarantee, and typically requires the beneficiary to return the original guarantee or issue a release notice; if the guarantee is unconditional and payable on demand, claim risks may still exist before termination; after termination, written confirmation from the bank should be obtained to avoid subsequent disputes. Unlike 'cancellation of a letter of guarantee,' which mainly refers to cancellation after issuance but before it takes effect, termination emphasizes the end of liability after effectiveness; compared with 'lapse of a letter of guarantee,' lapse usually occurs automatically due to expiry of the term, while termination may be triggered actively or passively for various reasons. Foreign trade practitioners should pay attention to termination clauses in guarantees, handle procedures promptly, and reduce capital occupation and risk exposure.