Also referred to as a demand bond or (confusingly) a demand guarantee, even though it is not a guarantee in English law.

A document that imposes a primary obligation on the issuer to pay the beneficiary on its first demand (or on demand) where the primary obligor fails to perform a specified contractual obligation owed to the beneficiary. The issuer's obligation is not affected by disputes relating to the underlying contract between the beneficiary and the primary obligor, and the beneficiary is usually entitled to payment simply on submitting a statement to the issuer that the primary obligor has failed to perform a specified obligation under the contract. The obligation under the document is independent from the underlying contract which it relates to and operates strictly in accordance with its terms.

There are various types of on-demand bond, including bid bond, performance bond and advance payment bond. They are similar in nature to standby letters of credit.

For more information on on-demand bonds and on how they differ from guarantees, see Practice note, Bonds, guarantees and standby credits: overview: Issuer's obligation under a guarantee and a bond distinguished.

For information on the Uniform Rules for Demand Guarantees (the current version of which is called URDG 758) published by the International Chamber of Commerce, see Practice note, Bonds, guarantees and standby credits: overview: International Chamber of Commerce Uniform Rules.