Research On Legal Issues Of Letter Of Credit Fraud

As a widely adopted type of settlement in international trade,letter of credit is known as the lifeline of international business.It becomes superior for being based on banking credit while not restricted by underlying contract.With only the eligible written documents used as terms of payment,transaction risk in conventional trade credit is significantly reduced.Speaking from the buyer side,as letter of credit is a secure and convenient means of payment in international trade,to guarantee as much as possible its independence and abstract has become a basic position maintained by nations.However,the existence of inherent flaws of mechanism leaves space for deception.In recent years,letter of credit payment has frequently suffered commercial fraud performed by unlawful use,which has significantly affected its basic principles and the equity in international trade as well.Since Western countries generally have a long tradition of doing transnational trade,they have developed a well-established systematic legislation for fraud protection and have accumulated a sufficient number of authoritative precedents.For comparison,legislation and judicial practice in present China still is relatively undeveloped.The enactment of Provisions on several issues letter of credit dispute cases(short as Regulations),which is regarded as a joint efforts of both academia and jurisdiction on fraud protection,to a certain extent has filled the gap.With cases being increasingly complicated,the directive function that the Regulations has brought to judicial practice is becoming less effective.This article attempts to find the background and theoretical framework of the L/C fraud,through a comparative study of the fraud exception principle between China and the major foreign countries' legislation and judicial practice,combining with the problems in the judicial practice,legislative and judicial aspects,in order to put forward the corresponding solution countermeasure,makes every effort to get cited in practical operation,promoting the development of economic and trade relations.