Issues On Bank's Examination Of Documents Against Documentary Credits

Between lawful relations of documentary credits, examination of documents is the key job in the execution of the documentary credits transaction, the issuer has the obligation to pay once the beneficiary offers documents which comply with the letter of credit. So examination of documents under the letter of credit becomes focus of disputes resulting from the letter of credit. transaction in the letter of credit is the system of commercial credit in which banks offer the beneficiary payment and guarantee. During the operation of the letter of credit, it is so important for the bank to examine documents, the key problems focus on what is the examination standard and how to examine, and so on. The same checker may reach opposite conclusions if he or she applies different standards. The result of examination determines the function of the letter of credit, which affects the benefits of applicant, beneficiary and the issuer. so selecting a sound standard counts so much in transaction of the letter of credit. as to the standard of examination of documents, whether ICP or ICC ,even our civil law just provide general provisions that documents comply with the letter of credit on the face, about which they give no further specific provisions. The standard of documents examination needs feasibility in practice. Regarding to the standard of examination of documents, the law is not only a system design, but a practical process. So it is very necessary to provide a uniform, reasonable, feasible standard of examination of documents, so the writer suggests a "reasonable and apparent compliance standard", which concerns both subjective and objective factors. This article elaborates this in three chapters except for foreword and conclusion.In the foreword, the writer stipulates problems, situations, purpose and objects concerning transaction in documentary Credit. Chapter One summarizes standards of examination of documents, first, describes its development conditions with laws, then provides general analysis of banks' independent obligation to examine documents under the Letter of Credit. In Chapter Two, gives detailed analysis of existing standards of examination of documents and respective advantages or disadvantages. In Chapter Three, referring to UCP600, the writer puts forward "reasonable and apparent compliance standard". In the conclusion, summary is given regarding to this article.