Study On The Legal Problem Of Documentary Credit Fraud

Since the letter of credit (L/C) came out in 19th century,it has substituted bank credit for commercial credit. From then on,L/C spread all over the world and became the most leading and common mode of payment, which contributed to the development of international trade. Therefore,L/C is regarded as "life-blood of international commerce" for a long period. However, L/C abstract independent principle gives rise to the chances to illegal merchants, and there exists the complexity of international in addition. In this way, L/C fraud is becoming increasingly popular.In import-export trade of our country, L/C fraud occurs frequently, which brought great loss to Chinese enterprises and banks, shaked the buyers' and sellers' confidence given by L/C and caused tremendous damage of international trade activities. Therefore, profoundly studying on the related legal issues of L/C, stregthening the prevention consciousness and measures of respective party involved in trade of L/C, at the same time, further establishing and perfecting the related legal system,and reinforcing the legislation,enforcement and usage issues of law, have an important theoretical and realistic significance in developing import-export trade of our country.This article has illustrated the subject in the following six aspects. In the first part, the systematic basic issues of L/C are illustrated, which mainly explains the concept of credit and its law quality, the settlement of L/C and its risk. Part 2 explains the cognizance of L/C fraud, which mainly explains the concept of the cognizance of L/C fraud and its composing terms, the incorporate of L/C fraud. Part 3 illustrates the causes of formation of L/C fraud, which mainly explains the leaks of interior running system of L/C, the party's factors and the disfigurement of exterior protection system. Part 4 shows the prevention measures of L/C fraud, which mainly explains the international prevention of L/C, the self-prevention of L/C buyers, the self-prevention of L/C buyers ,and the prevention of bank. Part 5 analyses the relief measures of L/C fraud, which mainly explains the relief measures of bank of L/C fraud and the relief measures of law of L/C fraud. The last part shows the current legislation and judicial practice relating to L/C fraud in China and maks some suggestions.Therefore, based on the combining method of theory and practice, and legal study on L/C fraud at the core, this article studies the fundamental theory of L/C, relief measures in advance and relief of measures afterwards etc. In my opinion, only by recognizing the legislative status quo of L/C fraud and existing problems, perfecting the legislation of L/C, enhancing the anti-fraud consciousness and ability owned by the parties involved, can we protect legal rights and interests of the parties, completely eradicate the occurrence of L/C fraud.