Letters Of Credit And International Factoring Comparative Study

Focusing on the two payments of the international trade, the international letter of credit and international factoring , the author analyzes and compares their definitions, legal natures and specific characteristics, summarizes the matters of the two payments in our country, and puts forward some specific suggests.The article is divided into four parts. The first part is about the summarization of the international trade payment. The second part is about the nomological comparison of the letter of credit with the international factoring. In the third part, the specific characteristics of the two institutions are compared. And the fourth part is about the application and practice choice in our country.In the first part of the article, the author introduces the meaning and the features of the international trade payment and reviewes its development. Then the author introduces the remittance, collection, letter of credit and international factoring as today's major types of international trade payment, through the points of the basic definitions and classifications. Thus the readers can roundly understand the payment of international trade.In the second part, the author analyzes and compares the two institutions' legal nature and summarizes the differences. Then, on the base of the analysis about main theories, the author presents her own views that the nature of the letter of credit should be master in the practice because it is from commercial practice; and the International Factoring is a transfer of creditor' s rights in the civil law.In the third part, from the points of the main system, the system processes, transaction costs, financing characteristics, potential risks and payment mechanisms, the author compares the international letter of credit and international factoring, then analyzes all the advantages and shortcomings of the two institutions which appeared through the comparison. The writer believes that such a comprehensive comparison of the two systems is not only the premise of our understanding, but also the base of the choosing in the practice.After the analysis and reasoning in the second part and the third part, the author discusses the application and choice of the international letter of credit and international...