Research On The Soft Clauses Of Letter Of Credit

As an important means of payment in international trade of different countries, letter of credit have been adopted by many importers and exporters. However,the soft clauses are weakening the role of trade payment, and tend to bring the beneficiary some unnecessary risks and losses.The research about the soft clauses is common,but most focus on how to identify and avoid the soft clauses.In this paper ,I am going to start with the analysis of system of letter of credit,and on this basis,discuss the basic theory as well as the nature of the soft clauses.Through the above-mentioned analysis,I advance some measures for the identification and prevention of the soft clauses,as well as the operation of judicial relief.Finally,I am going to advance some suggestions about how to perfecting the credit system.The main part of this paper is composed by six chapters,including about 40,000 Chinese characters.The first chapter is about the basic theory of the letter of credit.The chapter describes the origin,the principle of independence and abstract ,legal relationship as well as the nature of the letter of credit.The series analysis will provide the prerequisite for the soft clause problems discussed below.The second chapter is about the basic theory of the soft clauses.Firstly,I advance the theoretical dispute of the soft clause.The soft clauses are unilateral under control of the applicant or the issuing banko It is often very difficult for the beneficiaries to obtain documents under the letters of credit,even if the beneficiaries fully fulfilled the basic obligations under the fundamental contract.Accordingly,there is no any guarantee for the beneficiary to submit documents to the bank in order to receive payment. Secondly, the chapter divided the soft clauses into several types,specifically classified from the subjective purpose of the soft clauses.The types are as follows:for the purpose of fraud,for the purpose of the initiative of the letter of credit fully grasped by the importers,as well as the purpose of controlling the quality of the goods.Finally,I analyse the causes of the soft clauses,which mainly has two aspects,both the internal reasons and the external trade environment.The third chapter is about the legal nature of the soft clause.By comparing soft clause with the revocability of the letter of credit,the letter of credit fraud, the conditions attached to the legal documents,it seems that the legal nature of soft clause would show multiplicity. At the conclusion of the chapter,the identification of the legal nature of letter of credit should be through various ways,including subjective and objective,as well as according to the ultimate effect of soft clause. An ambiguous point of view is not desirable.The fourth chapter is about the identification and prevention of the soft clause based on above analysis.The first part of the chapter is about how to identify the soft clause from different angle.The second part is about the ways of preventing soft clause,such as chosing the merchant prudently, chosing a good credit issuing bank, signing trade contracts carefully,reviewing the terms of the letter of credit carefully.The fifth chapter is about the judicial relief of soft clause.there are two ways for judicial relief of soft clause,including the relief under the banking operation and the fundamental contract.The sixth chapter is about the suggestions for the improvements of system of letter of credit.Specifically,there are four ways of improving the letter of credit.The ultimate objective of these improvements is to avoid the harm brought about by soft clause,and play a greater role.