Letters Of Credit Risk Prevention Mechanism And International Trade Law Unification

Letter of credit (L/D) is the most important means of payment in the world. When the parties don't trust each other, they have the aid of bank's credit. The usage of L/D, which is efficient in trading, promotes and strengthens the development of international trade. Independence is the fundamental principle in using L/D. However, it is also the original reason, of which risks appear. Fraud is a long-standing problem in most states' administration of justice and banks. The courts in the states are confronted with the choice between fraud exception and independence. UCP is the custom, which is universally used in the states. The widespread use of L/D extends its system. But UCP couldn't solve all problems. Domestic legislations complete the work that is left. The combination and balance of UCP and domestic legislations could make L/D safe and swift means of payment. The article deals with analyzing the reasons of risks and studying preventions of risks and judicial remedy. Because international trade law is face with these general problems, its unity should be considered once more.