Fraud rules for letters of credit, A comparative study

Abstract

The documentary letters of credit have played a role in commercial transactions for a long time and are among the most popular trade finance instruments used in international business. Despite the fact that main purpose of the credit is to reduce the risk of trade, their mere documentary characteristic makes them abusable to fraudsters. That is the reason why there is an endless interest among researchers and practitioners to study the nature of fraud in documentary credit. However, studies are limited to most popular international practices and legal systems such as ICC rules and the UCC, all of which are still mysterious with a majority of Vietnamese practitioners. Despite the fact that Vietnamese businesses get used to different types letters of credit, the defective of this financial instrument, or frauds, are not well-examined. Many domestic corporations faced bankruptcy due to severe loss for LC fraud. It is supposed that the lack of investigation in LC fraud contains potential threats. Looking at the facts mentioned, the author aims to write the thesis “Fraud rules in letters of credit: a comparative study”. The thesis is expected to assess the background of LC fraud from which will explore the current legal framework that governs LC in Vietnam. For that aim, the author will make a comparative study of fraud rules at international level and an analysis at national level with proper rules and cases.