Abstract:This thesis mainly analyzes the risks of letter of credit, including exporters, importers, banks, exporters and shipping companies and the risk of credit system itself. Then, it puts forward measures for preventing the risks of soft clause and fraud. Attaching great importance to the signing of the contract, strengthening the audit work, earnestly performing their duties can effectively guard against the risks of soft clause. Improving the ability of business personnel, paying attention to credit, insisting on flexible clearing, strictly controlling the credit limit can avoid the risk of fraud. Only effectively avoiding risk and finding out the way to solve disputes, then we can do a good job in international trade.

Key words: letter of credit settlement; risks; preventions; fraud

CONTENTS

Abstract

中文摘要

1. Introduction1

2. Risks of Letter of Credit....1

2.1 Risks Faced by Exporters

   2.1.1 Risk of Dishonor

   2.1.2 Risk of the Loss of Payment Ability by the Parties 

     2.1.3 Risk of Counterfeit Letter of Credit

2.2 Risks Faced by Importers

     2.2.1 Risk Brought by the Exporter’s Unable to Keep the Agreement

     2.2.2 Risk of Forging Documents by the Exporter

     2.2.3 Risk of Anti-dated B/L by the Exporter

  2.3 The Risks of Exporters and Shipping Companies

     2.3.1 Risk of Collusion between the Exporter and the Carrier 

     2.3.2 Risk of the carrier’s bad faith 

  2.4 The Risk of Credit System

  2.5 The Risks of Bank

3. Countermeasures....7

  3.1 Countermeasures for the Risk of Soft Clause

     3.1.1 Seriously Concluding a Contract and Improving the Terms in the Contract

     3.1.2 Strengthening the Audit Work of Letter of Credit

     3.1.3 Performing Seriously the Obligations Specified in the Letter of Credit

  3.2 Countermeasures of the Risk of Fraud

     3.2.1 Improving the Quality of the Business Personnel

     3.2.2 Paying Attention to Credit Investigation

     3.2.3 Adhering to the Principle of Flexible Settlement

     3.2.4 Strictly Controlling the Line of Credit 

4. Conclusion10

Bibliography.11

Acknowledgements..12