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Sep 23
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INDEPENDENCE PRINCIPLE AND FRAUD IN DOCUMENTARY LETTER OF CREDIT AND INDEPENDENT BANK GUARANTEE

Marija Spasić

10.55836/PiP_23310A
ABSTRACT /

This paper analyzes the independence principle and the impact of fraud on the obligation to pay letter of credit or guarantee amount in documentary letter of credit and independent bank guarantee. The independence principle implies that participants in legal relations base their rights and obligations only on facts of the relations in which they find themselves in. The most important exception to independence principle is fraudulent claim for collection. First of all, rules of the ICC and UNCITRAL were discussed. It is necessary to start from rules of these organizations because they adopted the most important autonomous sources of law for these transactions. Then, rules of American and German law are analyzed with the aim of determining the necessary standard of fraud in these legal systems, since this issue is not regulated in detail in Serbian law. Therefore, it is necessary to consider comparative solutions. In the last part, fraud is discussed from Serbian law point of view. In Serbian law, the most important mechanism for protection against fraud are court interim measures which prohibit payment of the letter of credit, i.e. the guarantee amount.

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