Research On Legal Prevention And Recovery To The Risks Of Letter Of Credit

Letter of credit settlement began in the 19th. Today it develops into a mature payment tool that widely used in international trade. Increasing bank credit in commercial credit, letter of credit can eliminate the contradictions between the bargainers in delivery and payment, decrease the risk of the international trade, lighten the capital burden of parties, and promote the trade successfully. So, the bargainers are glad to adopt the letter of credit. But the letter of credit system itself exits limitations, and the risks of it increasingly emerge. Through the expatiation to the risks of the letter of credit in recent years, the writer analyses the basic reasons. At last the writer put forward some proposals to prevent the risks and some recovery methods when the risks happen.The important function of letter of credit is a payment means that can provide bank credit in international trade. However, it is not a perfect means that can avoid risks. And there is no system that can avoid risks in the world. In practice, the bargainers of letter of credit face all kinds of risks. The applicant may encounter the following risks. The applicant has no way to issue a letter of credit according to the contract. The beneficiary maybe forges documents. The shipper issues a guarantee in order to get the clean bill of lading. The beneficiary may encounter the following risks. Delivery date, goods, quantity, goods standard and so on don't accord with the letter of credit. The applicant takes the spurious letter of credit to deceive beneficiary's goods. Soft clauses may result in risks. The applicant forges confirmed letter of credit. The applicant forges letter of credit amendment.