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MERICAN Journal of Public Diplomacy and International Studies
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 grnjournal.us 
 
credit and the payment scheme; notify the recipient of funds about the opening of the letter of 
credit; a complete list and an accurate description of the documents that the recipient of funds 
must provide to receive funds under the letter of credit; the deadline for submitting documents 
after shipment of goods (performance of works), as well as other documents by agreement of the 
parties (Regulations on mutual settlements). 
The general rules of liability of the payer of funds for violation of the terms of the letter of credit 
are defined in article 802 of the CC. The issuing bank is responsible for this. An exception to this 
rule is defined in part 3 of this article, according to which "In case of unlawful provision by the 
executive bank of funds under a covered or approved letter of credit due to violation of the terms 
of the letter of credit, responsibility to the client may be assigned to the executing bank." Such an 
exception may be of practical importance only for a covered letter of credit, since in this case the 
payer of funds will suffer property damage, since he will incur certain costs for opening a letter 
of credit and will not receive an alternative benefit. as a result. In the case of an unsecured 
confirmed letter of credit, the payer's property interest cannot be violated in case of an erroneous 
payment, since the issuing bank has the right to refuse to cover the amount paid (part 2 of article 
801 of the Civil Code) or if the funds were withdrawn from the representative account of the 
issuing bank on behalf of the executing bank without its consent, the executing bank has the right 
to demand their return. 
When deciding on the subject of liability for the unjustified refusal of the executive bank to 
make a payment under a letter of credit to the recipient of funds and for violation of the terms of 
the letter of credit to the payer of funds, the following rule should be followed when alternative 
liability is possible: if the refusal of payment under a letter of credit or payment under a letter of 
credit if incorrect execution is caused by improper execution by the issuing bank their 
obligations (for example, the representative's account does not have enough funds to make a 
payment under the letter of credit or incorrect information about the terms of the letter of credit 
is indicated), the issuing bank is responsible. 
If the negative consequences are caused by improper performance by the executive bank of its 
obligations, liability should arise in relation to the executive bank. 
If such consequences are the result of non-fulfillment by both banks of their obligations properly, 
the responsibility should be assigned to both banks jointly and severally. According to some 
Russian scientists, responsibility should be determined by the contributions of each bank in 
accordance with the consequences of not fulfilling their responsibility properly (the principle of 
indemnity liability) [5]. 
In conclusion, it should be said that the letter of credit form of settlements is more complex and 
time-consuming than other forms of non-cash settlements.