Legal Analysis of the Nature of Letters of Credit

دانشنامه حقوق اقتصادی

Volume 29, Issue 21, August 2022, Pages 85-116   

Document Type: Scientific research

DOI: 10.22067/economlaw.2022.73552.1109

Authors

Meysam Rameshi^{* 1}; Homayuon Mafi²; Rasool Bahrampoori³

¹University of Judicial Sciences and Administrative Services

²Associate Professor, Department of Private Law, Faculty of Law, University of Judicial Sciences and Administrative Services

³PhD in Private Law, Faculty of Law and Political Science, University of Tehran

Abstract

Letter of credit, as an international payment instrument that is now widely used by traders in the international trade, has always been used as a reliable means of safeguarding the interests and rights of contract parties. Despite the widespread use of this payment instrument, businessmen and activists in the international trade pay less attention to its nature and source of the obligations in this international payment instrument. This Study examines the legal nature of Letters of Credit and views on this subject in light of the regulations in a descriptive-analytical manner. Legal scholars have offered different views on the legal analysis of the nature of the letter of credit and the source of its obligations. Although, some authors, considering the differences between the nature of letter of credit and contracts and negotiable instruments, believe that letter of credit should be analyzed as an international payment instrument with an independent and unique nature, however, Most of these views are based on contract law and have analyzed the nature of the letter of credit in the contract nature, that this view is more consistent with the accepted principles of the Iranian legal system.

Keywords

Negotiable Instruments; Unilateral Obligation; Third Party Beneficiary; Contract; Agency

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