Abstract
The means of payment of the letter of credit is the most important mean of payment in modern international trade. In order to define the legal relations and liabilities among every part in the L/C system, and encourage more and more people to take part in the L/C operation, we must have a clear understanding of the relationship between the L/C and the basic contract.
This thesis expatiates the relationship between the L/C and the basic contract. At first, the thesis discusses the connection of the L/C and contract, pointing out that the L/C is based on the sales contract. The thesis explains although L/C is based on the basic contract it is independent from the contract----Independent Principles which is the sill of L/C payment. The second and third part is the emphasis of this thesis, in which the letter of credit’s independence principle and the value of this principle are analyzed in details. The fourth part illustrates the doctrine of Exception of Credit Fraud. At last the thesis analyzes how the L/C affects the basic contract.
[Key Words] Letter of Credit; Basic Contract; Independence Principle; Doctrine of Exception of Credit Fraud