Research On The Confirmation Of "Good Faith Negotiation" Under Letter Of Credit Fraud

Article 10(4)of the Provisions of the Supreme People’s Court on Several Issues in the Adjudication of Letter-of-Credit-related Cases confirms the system of "negotiation in good faith" under the fraud of L/C on November 14,2005.As an exception to fraud exception,the system of "negotiation in good faith" protects the interests of the third party in good faith under the letter of credit and limits the situation that fraud frequently damages the independence of the letter of credit.However,because the current rules do not clearly stipulate the standard of "good faith negotiation",in recent years,there have been a lot of controversial judgments in China’s judicial practice,which distort the system value of "good faith negotiation".The current judiciary’s determination of "good faith negotiation" lacks objective and unified standards,and the determination of the burden of proof in specific cases lacks reasonableness.Although the "negotiation in good faith" system is the exception for the parties to apply for the stop payment order,it is related to the substantive distribution of rights and obligations.In terms of legislation,the establishment of the "good faith negotiation" determination standard in China should refer to the good faith acquisition system and the relevant provisions of the "Bills Law",and adhere to the principle of "conformity of documents" of the letter of credit,and it should adhere to "uninformed" and "no major negligence" as the basic basis.At the same time,it should fully consider the system value of "good faith negotiation",and combine the "interest measurement" principle with the new development of the letter of credit system,and weigh the interests of the parties.In the judicial trial,the people’s court should not only pay attention to the basic basis and criterion of applying the "negotiation in good faith" system under L/C fraud,but also consider the rationality of the current rules of proof.On the burden of proof of "negotiation in good faith",it is more beneficial to realize the fairness of the system by inverting the burden of proof.