Letter Of Credit Associated With The Contract

Being a great invention, letter of credit is a fine and ingenious trade payment instrument. It develops and matures with people's great care. Since the genius creation of this treasure, the businessmen bankers and lawyers have been dedicated themselves to maintaining the L/C mechanism, balancing lots of relations, strengthening people's confidence in L/C with the hope that more and more people could attach themselves to the L/C business during the development of law and practice. In the process of these balancing things, people scrupulously abide by some basic principles such as the principle of independence, documental transaction principle and the principle of strict compliance issuing banks' primary and prompt payment liability fraud exception, among which the principle of independence is the primary footstone and backbone of L/C.The application of the principle of independence has brought a series of consequential influence on both law and practice. Actually, the principle of independence has far more abundant connotations than what it seemingly signifies. Its appliance brings all kinds of independent relationship between many jural parties. It is the theoretical element tb direct this paper. Actually, the paper's innovation lies in the word "independence".Simultaneously, another element to direct the paper is its concern about law. L/C was originated by and services for business, thus its tenet is not totally to tally with the lawful system, but to meet the developing and perfecting need of practice. However, the increasing disputes need to resort to laws. Unfortunately, many problems arise for the laws are not in line with the development of L/C. People are puzzled by the application of laws, for different disputes should be solved by different laws. By analyzing the relationship between L/C and the relevant contracts, the paper tries to find the independence of L/C from those contracts, to ascertain the parties' rights and duties in order to avoid unnecessary conflicts. If something unhappy happened, concerning laws could be available to be resorted to and partiescould identify whom they should sue.Based on the comprehension of the letters' principle of independence, the paper introduces the legal nature of L/C in great detail, and in a creative way discusses the relationship between L/C and the relevant contracts such as the relationship between L/C and the sales contract, L/C and the application form, L/C and inter-bank agreements.In conclusion, the purpose of the dissertation is that it could be helpful for people: to comprehend and grasp the principle of independence; to operate while taking the specialty of L/C into account in practice; to manage and exert the relationship between L/C and the relevant contracts in order to avoid unnecessary bifurcations and conflicts; to maintain the effective L/C mechanism, inspiring more people to rely on L/C and to participate in the L/C business, and to promote L/C to have a long blooming vitality.