Study Of The Legal Relationship Between The Letter Of Credit Issuing Bank And Letter Of Credit Applicant

The subject study addresses legal relationship between L/C issuing bankand L/C applicant during the process of L/C application, examination of theL/C documents, bill purchase, as well as when bankruptcy occurs.Although the letter of credit (L/C), as a sort of financial instrument usedwidely in today's international commercial trade, has been in place forabout two hundred years, most countries adjust their L/C practice rulesaccording to international customs and practices, especially the UniformCustoms and Practice for Documentary Credits published by ICP and ICPPublication No.500. In China, the related regulations are still not perfect.When dispute occurs, it is usually the L/C issuing bank who bearsunfavorable results, even the Uniform Customs and Practice forDocumentary Credits cannot protect the interests of the bank because it isnot at large and in focus. This makes it necessary to strengthen the study.This paper, combining the practice of domestic bank and legal cases, makesa thorough and overall study of the legal relationship between L/C issuingbank and L/C applicant with the comprehensive application of suchmethods as comparison, deduction and induction so as to make it clear therights and obligations between the two parties as an attempt to reduce theL/C issuing bank's legal risk and to provide reference for development of III法律硕士学位论文 信用证开证行与开证申请人法律关系研究our country's regulation on L/C transactions. This paper includes 4chapters, nearly 31 thousand words. Chapter 1 analyses every stage inapplication of L/C and demonstrates the change of legal relationshipbetween the bank and applicant in this procedure. According to the ContractLaw, this chapter compares the prevailing two different opinions on thelegal relationship between the two parties. With the application ofdeduction, chapter 2 analyses the current practices in the process ofexamining documents in aboard and home according to UCP500. Chapter3 presents the current situation of bill purchase in our country and makes acomparative study among several real property guarantee cases abroad andat home. Chapter 4, combining with the basic system of bankruptcy andthe draft of Company Bankruptcy & Reforming Law, analyses thebankruptcy's influence on the related rights and obligations of issuing bankand applicant.The main opinion of this paper includes 4 points. The first point is that thelegal relationship between the L/C issuing bank and L/C applicant is acommon contract relationship once the bank accepts the application, notagency relationship or guarantee relationship established for third party orspecial-hired work relationship. The second point is that in the process ofexamining L/C documents, only the issuing bank is entitled to decideaccepting or refusing the L/C documents, which both accords with our lawand helps protect the interest of issuing bank. The third point is that underour current legal system, the complete method of secured interest in the billpurchase includes both warrantor and trust receipt. The last point is thatonly the bank knows the respective rights and obligations of bank andapplicant definitely under bankruptcy, is it able to carry out efficientmeasure to prevent the risk in advance.