The Soft Clause Of L/C And Its Risk Guard

As a kind of extremely special provision of Letter of Credit-Soft Clause as well as risk guard of Soft Clause, this article launches the research on this question.The basic thoery of this paper is the thoery of independent principle and strict compliance and credit of issuing bank. Soft Clause of L/C vacillates the cornerstone of L/C-independent principle, and very possibly brings beneficiary with good intentions nonessential risk and the loss. But at present, research on this aspect is very weak and lacks the corresponding theoretical analysis. Therefore, this article, from carries on the scientific definition and qualitative of Soft Clause obtains, analyses the comprehensive classification of Soft Clause and its risks on the basis of the relative cases, thus in this foundation the article proposes concrete means, which conform to the practice operation to dodge the risk of Soft Clause:Ⅰ.To guard the risks caused by Soft Clause of L/C from the import and export company aspect, efforts should be mainly made by strengthening the import and export jobholders' own specialized knowledge level and the professional spirit of them, at the same time strengthening investigation into financial standing of Issuing Bank overseas .Ⅱ.To guard the risks caused by Soft Clause of L/C from the bank aspect, efforts should be mainly made by strengthening cooperation between the negotiating bank and the import and export company,before domestic exporter verifies the Letter of Credit, domestic negotiating bank should do it in advance, in case the Soft Clause could be promptly proposed to the exporter and be amended in time.Ⅲ. To guard the risks caused by Soft Clause from the convention and the policy aspect, effort should be mainly made through the usage of standard and the unified form of L/C as well as by advocating drawing up the relative regulations and the laws of Soft Clause,to realize the reasonable and legal guard against risk caused by L/C. Meanwhile regarding the consummation of L/C system ,the article proposes several suggestions for reference, then the article draws the conclusion: For an exporter, there is little risk on the L/C basis, no matter whether there is Soft Clause in an L/C, it is an important method of avoiding the risk caused by Soft Clause to examine the L/C strictly and to provide the documents in strict accordance with the L/C. If any problems are found, they should be solved pointedly. Concrete question should be concretely analysed. The means and the conclusion proposed is helpful in our correct understanding of Soft Clause and its risk, then is helpful for us to solve all sorts of troubles in the practice which Soft Clause brings.Firstly, the article contrasts the opinion from domestic and foreign scholars to propose her own definition and qualitative analysis to Soft Clause of L/C; Secondly, in the foundation of distinguishing Soft Clause, the article divides Soft Clause into two impotant types.One relates to documents and the other relates to payment; Thirdly, the article analyses two kind of risks which are possibly caused by Soft Clause; Finally the article summarizes risk guards from the import-export company, the bank as well as unified form and convention of L/C. This article is divided into three chapters respectively, the first chapter is Soft Clause and its theory summary, second chapter is risk caused by Soft Clause and its manifestation, third chapter is risk guard of Soft Clause as well as several suggestions on consummation of L/C system.