Banana IT company in Thailand has negotiated a sale of goods contract with IT city company, which lives in China. A condition of the contract between Banana IT company and IT city company specifies that Banana IT company has to provide a bank demand guarantee for securing performance obligations to IT city company. Therefore, Banana IT company requests Bangkok Bank, which is Thai Bank, to issue the guarantee in favor of IT city company. Bangkok Bank is not obliged to carry out this instruction unless it has agreed to do so, and it will require to set aside funds or to have other provisions to cover its prospective liability under the guarantee. When IT city company believes that Banana IT company has breached the underlying contract, IT city company will present a demand to Bangkok Bank, with other documents specified in the guarantee (if any). Bangkok Bank must pay IT city company and then reimburses Banana IT company under their contract.

Question and Answer from the case study.

• Specify all actors and their roles from the scenario
• Analyze and explain the structures of the guarantee contract from the scenario
• Explain the detail of the demand guarantee from the scenario