Documentary Fraud Under Letters of Credit—A Comparative Study of English and Chinese Law

Abstract: Almost 90% of the international trade is managed by ship, which has being dominated the international transportation over hundreds of years. The role of Documents in international trade, has turned the “money and goods” transaction into later “money and documents” transaction and in the process of improving international trade, a lot of by-products have formed at the mean time, one such being documentary fraud. Since we know, after the document-oriented trading system formed, the documentary fraud has appeared accordingly. Under documentary fraud, the letter of credit is always involved since now it has also become one of most essential method for payment in international transaction. It is clearly that currently, there is increasing number of documentary fraud which has already, to some extent, blocked the normal order of international trade. Under such environment, lots of international participants are involved in it as victims. Thus, in the middle of searching a better remedy, the voice for developing current letter of credit system has been proposed by international society. Apart from the current legal regime, The Uniform Customs and Practice for Documentary Credits (UCP )is quite expected by the public to make certain reforms. Although UCP is updated at regular intervals to meet the expectation of the trading community in providing an effective system to carry out international transactions, changes seem to be not very easy since the nature of letter of credit and the rules set in it which are driven from the longstanding customs by merchants involved in international trade. This thesis mainly and closely exams the legal perspective relating to documentary fraud bought from the English law perspective which happens to be the popular legal system and also the Chinese law perspective keeping in mind that China is one of the major centre of production.