On The Fraud And Statute In L/C

L/c is an international settlement instrument created by the financial circle and commercial circle in order to solve profit conflicts among all parties concerned in the international commercial transactions, it is a great creation in the international financial history. After l/c was created in the 19th century, l/c was popularized throughout the world swiftly. So far, it has become the most extensive clearing form in the international trade, because l/c guarded by the financial credit has an incomparable advantage over T/T and Collection or other clearing forms that are simply ensured by the commercial credit. At present, the great status of the l/c is faced with the most serious challenge. because the continual happening of lots of fraud cases in l/c gravely shook the buyer and seller's confidence given by l/c and done serious harm to the international trade. The author of this paper has been engaged in international finance for eight years and feels it is of great urgency for us to study fraud in l/c from legislation and trade operation aspects. The author of this paper will systematically elaborate and deeply study fraud and related legal issues in l/c, then hope it is helpful to establish statute about fraud in l/c and improve related judicial practice. The first chapter is about a general introduction to l/c.When we study fraud and related legal issues in l/c, we should begin with l/c. Generally speaking, l/c means a definite undertaking of payment by a bank to a beneficiary.l/c is issued as an agreement at request of the applicant (the importer)by a bank to a third part(ythe beneficiary)in order to guard to make a payment. The beneficiary get a payment from a bank through presenting documents stipulated in l/c . In the legal system of l/c, independence and abstract of l/c is a basic legal character. Although there are many different opinions about the legal nature of l/c,the author think that as for the legal nature , l/c is a conditional undertaking of payment. l/c contains three main characters:independent paper,documents transaction,bank credit. The second chapter is about a general introduction to fraud in l/c. At present, fraud in l/c become more and more serious in the international trade, it has a bad influence on l/c transactions. In a word, fraud in l/c is a fraudulent act that is committed through l/c clearing form. The method of fraud in l/c is various, according to all parties concerned in l/c transactions, it is divided into the applicant fraud, the beneficiary fraud, the applicant and beneficiary co-fraud, and so on. The reasons that lead to fraud in l/c are different too. But the main reasons why fraud in l/c happens are of l/c systemic defect. The third chapter is about a general introduction to fraud exception rules in l/c. Fraud exception means that being base on admitting independence and abstract of l/c, when fraud in l/c happens, a bank is permitted to refuse to effect a payment or accept and pay exchange of bills, and the court may granted an injunction against the bank . This special stipulation and acting break through independence and abstract of l/c that separate l/c from basic transactions, and get rid of application of independence and abstract of l/c in this conditions, and become an exceptive stipulation in application of independence and abstract of l/c, so is called fraud exception of independence and abstract of l/c. Seeing from the developing logic of fraud exception rules in l/c, America established this system earliest, and then England, Australia, Canada and other countries belonging to continent law system accepted it. Fraud exception rules in l/c are applied strictly. The fourth chapter is about the precautions against and legal relief of fraud in l/c. The effective solutions to fraud in l/c include the precautions against it before it happens and the legal relief of it after it happens. Before fraud in l/c happens, the applicant, the beneficiary and the bank may take different measures to prevent and decrease its happening. After fraud act in l/c happens and before the results of fraud act in l/c comes true, the victims may request the bank to refuse to effect a payment, or request that the court grant an injunction to enforce the bank to refuse to make a payment. The fifth chapter is about fraud legislations and related judicial practice in l/c in China. Up to now, our country has not specially stipulated fraud issues in l/c through the legislation. Apart from UCP500, our country usually apply judicial explains and related regulations made by the Supreme Court and related financial regulations made by People Bank of China to regulatel/c relationship. In judicial practice, the attitude of our national court to fraud in l/c,on one hand, we fully respect independence and abstract rule of l/c ,on the other hand, we allow fraud exception in l/c, but we have an prudent attitude towards it. Even so, there still exist many problems to solve in judicial practice of our country.