Standby Letters Of Credit Legal System

At present, standby letter of credit, as a mode of documentary security, is widely used in international economic activities. To normalize further the practice of standby letter of credit globally, the international Chamber of Commerce, on the basis of Uniform Customs and Practice for Documentary Credits and United Nations Convention on Independent Guarantees and Standby Letter of Credit, promulgated officially International Standby Practices on April sixth, 1998 to stipulate uniformly the legal systems and operation procedures concerning standby letter of credit. Standby letter of credit, as an international financial device having dual function of both guarantee and payment, is pretty complicated and unique in its own legal systems, and so far the study of its legal systems has not yet been made both comprehensively and profoundly. Therefore, enhancement of the study of standby letter of credit is not only a great help for practical sections of international business trade to know it both profoundly and systematically, but of vital importance to advance the use of standby letter of credit in either international and home trade, and quicken the course of merging our country into international financial unification.This paper is divided into five parts.Part one introduces standby letter of credit terse and concise. After the definition of, analysis of and inquire into the concept, kinds and uses of standby letter of credit, this article expounds emphatically the unique features of standby letter of credit by making a comparison of standby letter of credit with documentary credits and independent bank guarantee respectively.The second part defines clearly rights and obligations of the party of standby letter of credit. The paper makes a penetrating analysis of legal relations between parties of standby letter of credit to define explicitly rights and obligations of party of standby letter of credit.The third part probes into jurisdiction and Lex Causae of standby letter of credit in as great details as possible. The author expounds his viewpoints by commenting on foreign selection methods concerning jurisdiction and Lex Causae of standby letter of credit in accordance with various special cases of application of the law.The fourth part makes a simple comment on international unification of legal systems of standby letter of credit. This paper, after analyzing the reasons for the international unification of legal systems of standby letter of credit, reviews the course of international unification of legal systems of standby letter of credit.Part five makes a special enquire into the importance and impact that international unification of legal systems of standby letter of credit has on our country. This article, by making an analysis of the defects and inadequacy of our country's lawmaking and legal practice, makes preliminary suggestions in terms of the perfection of related lawmaking and legal practice in our country.