A Study On The Legal Perfection Of Trust Receipt

Trust Receipt is an important document in Bank’s InwardDocumentary Bills transaction. In practice, Trust Receipt is referred as thedocumentary signed by an importer and a bank, which is to protect thebank’s interest in the way that the loan it gives to the importer can berepaid. The bank releases all the documents of the Letter of Credittransaction including the bill of lading under trust receipt. Then, theimporter must deals with the goods and the documents on behalf of thebank’s interest. The proceeds obtained thereof shall first be used to repaythe bank.In general, the trust receipt originated from the financing practice bythe English and American banks. Its growth is based on the highlydeveloped system of Trust Law. In China, however, trust receipt is a total“foreign production”. Before the Trust Law of P.R.C was adopted in2001,the validity of the trust receipt is extensively questioned. After theadoption the Trust Law, there remain a considerable number of problemsin the practice of the trust receipt, weather in practice or in theory. In thisessay, the author aims at solving these disputed issues in a theoreticalperspective.This essay consists of four chapters apart from the introduction andthe conclusion.Chapter one mainly concerns the basic issues of the trust receipt suchas the concept of the trust receipt and the origin and development of it.Last but not least, the author discusses the trust receipt system in British,America and Taiwan. Chapter two deals with the nature and characteristics of trust receipt.First, the author discusses the controversy of the nature of trust receipt intheory. The trust is not a pledge and is not a chattel mortgage. It is a trust.Second, by comparing trust receipt with transferring guarantee, entrustedcontract and the trust guarantee, the author draws the conclusion that thetrust receipt is a trust contract. Last, the trust receipt is independent fromthe latter of credit transaction and the Inward Documentary billsagreement.Chapter three discusses the effect of the trust receipt. Fist, under thetrust receipt, the bank is the trustor and beneficiary and the import is thetrustee. They share the duty and the obligation under the trust law. Second,the author discusses the issue of the property ownership in three steps.Last, the author brings up the question of the limit of effectiveness of thetrust under the Trust Law of P.R.C.Chapter four is mainly about the judicial practice and the bank’spractice and the problems remained thereof such as the confusion of trustreceipt’s nature. In the end of this chapter, the author comes up with theperfection suggestion.