The Research For The Legal Problems Of Fraud Exception Of Standby L/C

With the development of global economic, standby L/C is widely used as a means of guarantee for debts because of its characteristic of independence,and it becomes more popular to the participants of the economic transactions.It provides stronger protection to the beneficiary and makes the obligations of the issuer more definite.However,the independence of standby L/C provides great convenience for the lawless person to commit fraudulence. Therefore, the principle of fraud exception has been adopted by the law of most countries to allow the court to issue injunctions against the issuer to pay the fraudulent beneficiary.However,it must be harmful to the regular functions of standby L/C if the interpretation of fraud be amplified. Therefore,it is beneficial to reach a balance between the principle of independence of standby L/C and fraud exception.Standby L/C must be used intensively in international economic transactions by our country in future,but the research of Standby L/C is just on a initial stage. The author's purpose to write this thesis is to issue some views to applying to the fraud exception of standby L/C, and make some constructive suggestions to provide some reference to make the legal rules an regulations of Standby L/C better.The author has been engaged in international settlement for a few years and has some information of standby L/C.The author has used comparing method,combined the legal regulations to standby L/C and some practice in banking work, and have consulted a large number of documents about the law of fraud exception to standby L/C and documentary L/C.The main body of this thesis is composed of 4 chapters.Chapter 1 reviews the definition of standby L/C.The characteristics of standby L/C are elaborated. Comparasion between standby L/C and documentary L/C are also made in this chapter.Chapter 2 discusses the reason for standby L/C fraud and the forms of such fraud and introduces the principle of standby L/C fraud exception and give the fraud a proper definition.Chapter 3 discusses the two ways to exercise the fraud exception: the issuance of injunction by a court and the issuer' s right of defence against payment. Chapter 4 puts forward some legal suggestions against standby L/C fraud in China. The conclusion of this thesis is that it is necessary to establish the legal position of standby L/C and extend the applicable scope of standby L/C;China shall sign the United Nations Convention on Independent Guarantees and Stand-By Letters of Credit as soon as possible and take Article 19 as the basis for the determination of fraud; As for the measures taken by the court, we shall issue an injunction for payment instead of order of freeze.