On The Basic Principles Of The Documentary Credit In Trial Practice Applications

Letter of credit is a means of payment based on the credit of banks, it is a conditional payment promise made by the banks. It is different from the revocable L/C. It is a L/C of irrevocable draft and necessary documents. In the application of irrevocable L/C, there is a mutual contracting arrangement among the applicant, opening bank and the beneficiary. It is based on the requests and instructions of the applicant and issued by the opening bank for the benefit of the beneficiary. As long as all the required written documents and vouchers are produced, the opening bank will pay the exporters in advance. The irrevocable L/C can guarante the goods be delivered and the documents be collected and can faciliate the fund circulation of both importer and exporter. The irrevocable L/C has already been widely used in the payment and finance of the international trade.As for the legal natures of the irrevocable L/C, there are several theories internationally, induding contracting theory, commissioned client theory, preserving theory. But the author thinks the nature of L/C is the civil affairs right and obligation agreement for opening, alteration and expiry among the subjects with the equal rights. The relationship between the opening bank and the beneficiary falls into the definition of contract and has the character of the ordinary contract. The auther agrees with some scholars opinion. The subject of the L/C is opening bank and beneficiary, the object is the payment made by the bank. The content is the right of being paid if the beneficiary can produce qualified documents. The L/C is a document contract. The bank has the obligation to pay, while producing the documents by the beneficiary is the condition, but not the obligation. The L/C combines the function of payment and financing in one, which is different from other contracts. The L/C is a special contract between the opening bank and beneficiary for the payment on the sight of the qualified documents.The L/C has two unique principles-the independent abstration principle and document conformity principle. They are the cornerstones of the L/C. In the contracting relationship, the independent abstraction is the core. In the operation of the principle the key is to balance the independent abstraction principle and the anti-deceit measures and the deceit is the exclusion of the principle. In order...