Discussion on the legal aspect of letter of credit transactions and recommendations for Vietnam

Abstract

Foreign economic activities in general, foreign trading and international payment activities in particular, are regulated by a complex system of legal documents, including both the national and international legal system. To avoid disputes and risks arising in letter of credit (LC) transactions, the involved parties must thoroughly understand the legal substance of all the relevant regulating
documents, in which the most important one is the international trading rules and guidelines issued by the International Chamber of Commerce (ICC). As these ICC documents are not mandatory and do not include sanctions for handling disputes, this article will discuss deeply on the legal substance of these documents with a focus on issues relating to LC transactions, aiming to provide recommendations for involved parties.