A Study On Legal Issues Of Soft Clauses In Letter Of Credit

During International trade, it pretty hardly realizes equivalent tradeoff betweenbuyers and sellers because of geographic barriers (e.g. two parties dwell in differentregions or diversified countries so that they fail to obtain commodities as they pay),even when some problems take place, they cannot be tackled as domestic trade doesswiftly and instantly, nor can one party be aware of creditability about hiscounterparts promptly. For this case, it generates Letter of Credit (L/C) which ischaracterized by its high credibility and convenience etc. So far, it has been widelyused and treaded as a means of settle accounts in international trade. With increasingdevelopment of International trade, especially for existence of independencyprinciples of L/C, brings about advent of a large number of soft clauses in L/C, andcauses risks and losses to buyers. So currently, are lots of studies about soft clauses inL/C conducted by both professors and scholars home and abroad, unfortunately, theyeventually do not reach a consensus, even for international authority institutions havenot yet provided a definite definition. In this essay, I myself attempt to put forwardsome personal ideas and opinions about soft clauses in L/C based on analyses ofprevious studies. Under these circumstances, this essay treatises on it by three parts.In chapter one, in the first place, defines L/C, meanwhile, it explains "principleof independence "and "principle of strict agreement", it further points out its legalnature employs rationale of contract relationships. Based on this, it generalizes thedefinition of soft clauses in L/C, explains its connotation; and analyzes whatgenerates the soft clauses of L/C objectively and subjectively, in the mean time, itclassifies its forms.It narrows angle down to analyze legal nature of soft clause and its validity inchapter two. For instance, Illustrations for current opinions concerned about legalnature of soft clauses in L/C, a few analyses and comments about existing ideas,analyses about validity of soft clauses in L/C undertook by all parties.Chapter three shifts its attention to discuss and present recognition, defense and remedy of soft clauses in L/C. Due to the variety and complexity of soft clauses inL/C, means and manners of recognition is of great importance. This essay, thereby,will put its focus on analyzing means and manners of identification in case formerscholars are ambiguous about them. On the basis of this, it points out resolutions andsolutions about how to defend and remedy existing issues of soft clause in L/C. Onthe other hand, remedy of soft clauses encompasses not only remedy affiliated withLetter of Credit items, but remedy affiliated with basic contract items.On the basis of all parts of ideas, typical cases and international commercialpractice, the issues above are deeply discussed and personal ideas are put forward inhope of perfecting the system of L/C and guiding practice of international L/C.