Abstract
An increasing number of transactions in the bilateral trade between Korea and China rely on collection and remittance, resulting in an increase in exporters' demand for trade financing. Therefore, there is a need to vitalize forfaiting transactions using drafts or promissory notes, which are based on the collections. In the forfaiting transactions, exporters transfer a payment claim to forfaiters on a non-recourse basis through a without recourse endorsement. However, forfaiters do not know importers' creditworthiness and ability to repay drafts or promissory notes; thus, they need a bank aval as a means of credit support. In forfaiting using aval, the drafts or promissory notes are transferred internationally. However, there is no internationally unified law that regulates drafts and promissory notes, and the governing laws related to such drafts and promissory notes do not accept the "principle of party autonomy." Therefore, there is no other choice but to apply the laws of a certain country, in the event of any dispute relating to such drafts or promissory notes. This paper examined forfaiting using aval from the comparative law perspective, focusing on the "Law of China on Negotiable Instruments." The results of this study may to provide businesses involved in international trade with practical guidance and assistance when using forfaiting with aval, especially in trade with China.