Study On Negotiating L/C And Outward Bill

Up to now, letter of credit is a very important settlement instrument in import and export transactions of our country. According to the statistic data, more than 80% of the export transactions are balanced under the terms of letter of credit. Among several kinds of L/C, Negotiable L/C is a familiar one. Negotiable L/C allows the beneficiary to transfer the draft or other documents to a specify bank for negotiation. As a rule, once the documents matched the L/C, the negotiating bank will pay the beneficiary in advance after interest and handling charge are deducted. There are many disputes on negotiable L/C in our country, and the courts always can not identify these disputes clearly in their judges. Most of the disputes are due to careless stipulation of Uniform Customs and Practice for Documentary Credits. And the disputes always focus on the constitution of consideration for negotiation, the differences between negotiation and outward bills and the recourse of negotiating banks.Outward bill, which is frequently used, is a unique trade financing measure in China. Outward bill is a short term financing measure in export transactions, which allows the exporters to transferring the relevant documents as the guarantee to get loan from the negotiating bank or the notifying bank, and all of these operations are proceed before the payment of the opening bank or the confirming bank and are always under the terms of L/C or collection. Outward bill is not stipulated in UCP, neither in the law of china. Instead the rules of law, some customs and routines of outward bill operating banks become the main source of rules for the courts to settle the disputes on outward bill. But the banks have different definitions and procedures on outward bill operations, so the judiciary section can not find an accurate identification for legislation. And the differences of definitions and procedure mainly concentrate on the characters of outward bill and the differences between negotiation and outward bill. This paper will detailedly discuss and analyse the problems above.This paper contains five parts, and they are:Summary of Negotiable L/C, as part one, will mainly discuss the categories of negotiable L/C, the differences between open negotiable L/C and restricted negotiable L/C, the parties of negotiable L/C .Analysis of the rights and responsibilities of the negotiating bank, as part two, will mainly discuss some important rights and responsibilities of the negotiating bank, such as the rights of recourse, the responsibilities of documents examination and notification.Identification and analysis of negotiation, as part three, will mainly discuss the disputes on negotiation.Outward bill and negotiating L/C, as part four, will mainly discuss the characters of outward bill, differences between outward bill and negotiating L/C, and the reasons for operating outward bill in our country.Conclusions and suggestions for legislation, as the end, mainly discuss the applicability of outward bill in China and the necessity of the judiciary explanations on outward bill.