Research On Legal Aspects Of Banking Documentary Examination In The Letter Of Credit

Letter of credit is an important method of international transaction payment, which should be issued according to the trade contract. Letter of credit plays a core role in promoting the development of international trade and flourishing the world economic prosperity. In view of special function of L/C, it was even known for "The blood of international commerce" by British Judges. However, in recent years, the usage rate of L/C has declined greatly. Obviously, L/C is faced by serious developmental crisis. Through the analysis of this phenomenon, the problems of banking high refusal rate existed in the process of examination of documents attributes to the decline of L/C application in the international trade practices. As we all know, in the operation of letter of credit, a confirming bank and the issuing bank must determine whether or not the documents appear on their face to complying with the presentation of all the documents on the basis of the documents alone, And when the documents presented is complied with the terms of L/C, they must honor or negotiate. The responsibility of nominated bank is acting on its nomination, Therefore, it can be turned out that the examination of the documents is very vital and complicated step during this procedure, Moreover, which standards should be used to judge whether the documents presented is consistent with the terms of L/C is the key question of the examination of documents. In L/C practice, there has been not a uniform and specific standard to judge the documentary compliance by now according to the principle of strict compliance which is one of the basic standards for examination of documents. However, in the definition of UCP600, it stipulates "Complying presentation means a presentation that is in accordance with the terms and conditions of the credit, the applicable provisions of these rules and international standard banking practice", the new article are trying to build up a more reasonable and international banking practice standard for the examination of L/C. Undoubtedly, it will play significant effects on the examination of documents. Nevertheless, one coin has two sides, these basic rules of L/C can provide chances of L/C frauds. Therefore, in order to strictly guard against L/C fraud, decrease the rate of refusal, guarantee letters of credit transactions can be carried out successfully, in China, we should pull ourselves to establish and improve legislative regime, so as to promote sustainable development of international trade. This thesis is mainly composed by five parts. the core of this thesis is the theory of standard for examination of document. At the same time, it discusses and analyze the fraud exception which is related with strict compliance. The structure of this thesis is as follows:In the first part, it introduces the basic concept of a bank letter of credit; in the second part, it analyze the law and its application of letter of credit on the view of the current international condition and domestic legal analysis; In the third part, it analyzes the main three historical standards of examination for documents; In the fourth part, it discourses the core principle of banking examination of documents-principle of strict compliance and discusses the new development of examination of documents; in the last part, it focus the fraud exception which is relevant to banking examination of documents. The fraud exception is the negation of the principle of strict compliance. It is hoped that this paper could play an vital role to promote and perfect the efficiency and function of letter of credit structure by researching on the banking examination standard of documents.