Legal Research On Letter Of Credit Fraud Exception

With the development of international trade, letters of credit (L/C) has become one of the main methods of payment. The principle of the independence and abstract of L/C and the "strict compliance with" principle make L/C independent of the sales contract, make the banks out of the complexity of trade disputes, but the principles of L/C at the same time leaves room for L/C fraud. L/C fraud is not only against the property rights of the importers and the banks, but also does serious damages to the normal international trade system, and economic order. Therefore, as remedial measures in L/C transaction system, the L/C fraud exception is in accord with the development of L/C itself.America began to use L/C in 19th century and it has accumulated rich experience from L/C practice.UCC is the only code of written law involved with L/C fraud exception. In the field of L/C fraud exception, UCC5 and some American legal cases are the learning and imitating objects of many countries. In October 2006,the adopted "Uniform Customs and Practice for Documentary Credits" (UCP600) which doesn't make any provisions for the rules of fraud exception, which establishes the position of authority of "Uniform Commercial Code" in this field.Provisions of the Supreme People's Court on Some Issues in the Adjudication of Letter-of-Credit-related Cases are judicial interpretations that links to international practice. The rule of fraud exception of the Provisions mentioned above not only refers to American experience within this field, but also considers the reality of our country. But it still leaves much to be desired.From the point of view of the significance of the US L/C fraud exception system for China, through empirical study, comparison, induction analysis and case study, this article makes study on some legal issues about L/C fraud exception.The first part is an overview of the letter of credit fraud exception. At first, through both theory and practice it analyzes the reasons for the formation of L/C fraud, and then by a classic case, it illustrates theoretical basis for the establishment of the principles of L/C fraud exception, finally reviews the status quo of international law on the regulation of L/C fraud.The second part discusses on the issue of the application of L/C fraud exception in the US laws. Through the analysis of the revised UCC5, it identifies three conditions in which L/C fraud exception can be applied and by a classic case, it explains the application standard of the letter of credit fraud exception -- - the meaning of material fraud.The third part from both sides of entities and procedures makes research on injunction as legal assistance against L/C fraud. Firstly, by studying the basic theory of the injunction, it clarifies the meaning, nature and type of the injunction; secondly by the statement of non-injunction principle , it explains the reasons why various countries'courts will not grant an injunction against L/C fraud; and then it classifies the conditions that court grants injunction in US statute law and case law into essential terms and procedural terms; Finally, it illustrate the proceeding at which the US laws grant injunction against L/C fraud.The forth part analyzes the "Regulations" issued by the Supreme People's Court and illustrates the significance of the US L/C fraud exception system for China through the comparative research method. Through the comparison it summarizes the successful results of the"Regulations"learning from UCC, the breakthrough of UCC and the existing problems. Finally, it puts forward some proposals to improve on the problems.