The Research On The Precaution Of Stand-by Letter Of Credit's Fraud Risk

Stand-by letter of credit as a new form of independent guarantee, is developing since it appeared because of broad applicability and flexibility. The fields of usage contain settlement, financing, the contract fulfilling, and it becomes more and more important in international economic association. But the legal risks such as fraud risk, crediting risk, and handle risk are unceasingly at the same time. The fraud risk is the main risk that seriously interrupted the credit developed. The root is the independence principle; in addition, the international complexity, the defect of law, and the international credit environment are reasons too. In England and the USA where the stand-by letter of credit comes into being and developing, established fraud exception principles, which we can absorb by comparing.The precaution of stand-by letter of credit's fraud risk includes preventing the risk occurrence, avoiding the harm consequence and recovering the consequence. Each Party asked to pay attention to make clear his right and duty in anticipation. When the risk has happened, we can use the fraud exception principle and illegality exception to prevent the independent principle being suitable. When the harm consequence was existed, we can get the compensation by the arbitration or lawsuit.In our country, the relevant law and the judicial practice have many problems, which need us to consummate the legislation and to rule reasonably, thus to provide a fair and good legal environment.