| Advance against Inward Bills originate from commercial bank's practice on letters of credit which main purpose is to grand financing for the importer. As a great invention, Advance against Inward Bills business got support from legislation and judicial precedents in common law countries. In our country, many commercial banks induced such kind of business from the beginning of 1980's. But up to now, no law, stipulation or judicial precedents give confirmation on it. Following with quick development of international trade, practice on letter of credits go on new step and lots of legal problems appear in Advance against Inward Bills business. The main dispute is the acknowledgement on such business is quite different between legal circles and financial circles.For the nature of this business, some people think it is a mortgage loan on imported goods; some people think it is a pledge loan on imported instruments; and also some people think the bank become the owner of imported goods and instruments through trust receipt and authorize the importer to deal with the goods. From the court verdict, we can note that almost all courts maintain mat the mortgage or pledge is within validity, and the bank give up the control of imported goods and instruments, and avoid or not acknowledge the fact that the bank is the owner of imported goods and instruments through trust receipt. Lots of unfavorable court judgments land many commercial bank in a passive position. Many businesses reduced, But meanwhile, importers were pressing for further financing. Untill the trust law made public, commercial banks began the business with great care. Unfortunately, a series of legal disputes sued on court.In view of so urgent circumstances, it was time to clear and definite the nature of Advance against Inward Bills business, and academic research should be duty-bound. Practice already surpassed legislation, in my opinion, our legislation authorization should catch up with business practice and give definition. Hope my... |
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