The Research On The Fraud Exception Of L/C

"Stipulation about Certain Questions of Trying L/C Dispute Cases of the Supreme People's Court", adopted on October 24, 2005, has made a detailed stipulation about Fraud Exception of L/C, but there are still some problems of the Fraud Exception of L/C in practice and theory. Therefore, strengthening the Fraud Exception of L/C research is not only favorable to deepen people's understanding of the Fraud Exception of L/C, but also significant to improving the Fraud Exception of L/C system of our country further.The Fraud Exception of L/C is a source of the Principle of Independence and Abstraction and the Rule of Strict Compliance flaw, essentially complementary and contrary to the Principle of Independence and Abstraction and the Rule of Strict Compliance on condition that we insist on these. The rationale behind the Fraud Exception of L/C may divide into two levels: The first level is "reservation of public order". The second level is "the good faith principle", "the fair principle", "the security principle" and "the efficiency principle". With regard to the application of the Fraud Exception of L/C, it is essentially conditional upon material fraud; At the same time, the Fraud Exception of L/C can't resist the third party acting in good faith, also the third party acting in good faith can resist the Fraud Exception of L/C only on condition that it has already pay the consideration or will pay the consideration based on the legal relation of bill; Finally, regarding " whether the Fraud Exception of L/C is applicable to the third party (carrier) frauds" should make the concrete analysis with risk burden, moral risk, good faith, fair, security, efficiency and so on, distinguish four situations and deal with each case on its own merits. Concerning the Fraud Exception of L/C lawsuit, considering the Fraud Exception of L/C particularity, the intention of fraud should implement Burden of Proof inversion.Because our country has no much legislative and judicial practice with regard to the Fraud Exception of L/C, it is necessary to refer to the international convention, the overseas mature legislation and legal precedents. Certainly, we cannot blindly copy verbatim or imitate, on the contrary, should make rational choices and innovations based on combining and respecting our country's experience of judicial practice and general conditions.