On The Letter Of Credit Fraud And Judicial Relief

The letter of credit as a payment has appeared since nineteenth century. It develops very quickly and is widely used. So it is called the international trade blood and international lifeline. The most main of letter of credit is abstract independent principle, which refers to relationships between the letter of credit and the foundation contract. The bank is only responsible to examine the documentary evidence the superficial authenticity, the integrity and the accuracy. And the bank will undertake the responsibility to pay money to the beneficiary as long as the documentaries and the letter of credit is mutually consistent. The bank is don't care whether the foundation contract fulfills or fulfills completely. However this principle has provided the hotbed for cheat. Because according to abstract independent principle, as long as the documentary conforms to the stipulations of letter of credit, the opening bank will give the payment without restriction to the foundation contract. In view of this situation, many countries has modified the unique mechanism of the letter of credit and established the principle of fraud exception in order to make up the flaws of the letter of credit. When fraud exists, the court will introduce the principle of fraud exception to protect the rights of the applicants. This principle give the supplement to the principle of contract independence. It has maintained and consolidated status and functions of the letter of credit in the international trade.According to the statistics, the trade volume of the trade settles by letter of credit has composed about 90%. At present 80% of the trade volume is settled by the letter of credit. But because the laws and regulations of letter of credit fraud is not perfect, so many mistakes have appeared during the trial, even the phenomenon of abuse the principle of the fraud exception appeared. After our country joined the WTO, the volume of international trade will increased day by day. How to avoid the loss that made by the fraud of letter of credit and protect the applicants interests is become a very import law question. So it is very urgent to strengthen the research of this aspect.