Study On L/C Fraud Exception And Its Practices

Letter of credit is very important in international trade and provides convenience for both buyer and seller, so it is widely used in our modern international trade. In fact, letter of credit means commercial credit is substituted by banking credit. And bank plays a very important role in international trade, which guarantee the smooth transaction. The characteristics of L/C are the principal of the independence and the strict compliance with principle, which makes L/C different from the foundation. Meanwhile L/C fraud is emerging, which damage the interests of bank and both parties.In our modern life, L/C fraud seriously affects the confidence of both seller and buyer. It is also a strike to international trade. So fraud exception as a relief way was born at the right moment. Fraud exception means, if fraud happens, the court can give an injunction to prevent the issuing bank from paying, and the bank also can refuse to honor the draft. At present, there is no special fraud legislation in our country. It needs we, based on our domestic reality, draw on and assimilate the foreign excellent experience. Thus can we perfect our countries credit judicial and legislation?I will discuss the L/C fraud at fore sides. The first chapter is the brief introduction about letter of credit and L/C fraud. The second chapter is mainly about the applicable condition of L/C fraud and the fraud exception exemption system. The third chapter is the key one, which involves some of the questions in the application. Such as:the requirement of court injunction; the optimum case problems of the applicant and so on. The fourth chapter is about the judicatory and legislative practices of china. I hope my thesis can be useful for our countries legislation of letter of credit.