Commercial Fraud By Letter Of Credit

First, the case was introduced in November 6th 2004, and the domestic exporter A signed a contract for export of live fish with the Korean buyer B company.

In November 11th, B company applied for an irrevocable sight letter of credit amounting to US $70 thousand according to the contract request to C Bank of Korea.

Upon receipt of the L / C, A will deliver the goods to the port of destination specified in the letter of credit and send the full set of documents including three original bills of lading to the C bank.

After the signature of the authorized representative of the carrier, middleman and B company on the final quantity list, the B company will lift the goods on the basis of the copy of the bill of lading. At the same time, fax the inspection certificate issued by the Korean commodity inspection authority and the feeding table of the Korean aquarium to the A company.

Since then, due to changes in the Korean market, resulting in poor sales of goods, B company has hinted that the C bank is picking up the "discrepancy" in the documents and refusing to pay accordingly.

In the case of multiple efforts still unable to recover the arrears, A commissioned the China Export and Credit Insurance Corp to undertake overseas compensation in April 2005.

Two, case analysis, analysis of the case, careful analysis of the trade process of the case, we can find the following questions: since the A company and B company are settled by letter of credit, then how can the B company lift the goods when the full set of original bills of lading are sent through the bank?

Is there any fault in the case of the carrier?

According to the findings of the survey, the customs in most countries actively cooperate with the customs clearance and clearance of live fish trade in order to maximize the safety of the import and export parties.

In the case of A, the goods of the company were shipped to the port of destination in Korea within 72 hours after shipment. The original bill of lading will take 4-5 days to reach C bank.

In order to improve the survival rate of the fish, A company instructs the carrier to discharge the cargo. Therefore, after B company has completed the corresponding inspection procedures and paid the customs clearance fee, it will take the goods with the copy of the bill of lading.

It can be said that the carrier did not have any fault in the case, nor did C bank unlawfully release the bill. A's private delivery of goods eventually led to the "two loss of money and goods" unfavorable situation.

In the case, the time difference between the shipping and sending orders and the characteristics of the export products made the A company have to release the goods to the buyers ahead of time, and resulted in the eventual loss. Three

However, if A company releases goods through the bank, it can avoid the loss to a certain extent, that is, A company can request B to apply to the issuing bank to issue a "delivery guarantee letter" to the carrier, and then release the goods to the B company after the carrier has obtained the letter of guarantee.

When the issuing bank issues a letter of guarantee for the importer, the importer loses the excuse for refusing to pay the goods under this trade, that is, the importer can no longer refuse to pay on the basis of quality or other reasons.

In most cases, a letter of guarantee issued by the issuing bank is not unconditional. Usually, it will collect deposits from importers or require importers to provide other forms of counter guarantee. This is equivalent to the buyer's disguised payment of all or part of the payment, so as to provide necessary safeguards for the safe collection of foreign exchange.