Question: 5. A demand guarantee provided that it was subject to the law of the guarantor at the place of issuance. The beneficiary sued the guarantor

5. A demand guarantee provided that it was subject to the law of the guarantor at the place of issuance. The beneficiary sued the guarantor in a different country, and the court applied its own law and not that of the guarantor's issuing office. This resulted in damages against the guarantor not only for the face amount of the guarantee and attorney's fees but also damages that were consequential from the refusal to pay. Under the law of the guarantor's country, the guarantor would not have been obligated on the guarantee. Which of the following statements is correct? The applicant is only responsible to reimburse the guarantor for the face amount of the demand guarantee plus interest The applicant is not responsible to reimburse the guarantor because it would not have been liable under the law governing the demand guarantee and sub-article 34 (a) should apply The applicant is responsible to reimburse the guarantor and to indemnify it for the other damages that were awarded Do not know

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