A Study On The Fraud Risk In Stand-by Letter Of Credit

Stand-by letter of credit as a special form of letter of credit is playing an important role in the international trade relationship. While more and more risks are coming, the fraud risk is just one of these. The fraud risk is the main risk that seriously interrupted the credit developed. The root is the independence principle. In addition, the international complexity and the defect of law are reasons too. This paper departs six parts to discuss fraud risk. What is fraud in stand-by letter of credit and what the fraud appear become the first four parts. How to solve the problems that the fraud risk brings in most national courts becomes the fifth part. In England and the USA where the stand-by letter of credit comes into being and developing, the injunction develops fast, which we can absorb by comparing. 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. We could absorb the injunction when the risk has happened. As mean as while the injunction is not only the solution of property rights and maritime cases arears, but also developes into the credit arear.