Analysis Of The Soft Clause Terms Cases Of DC And Risk Prevention

With China’s accession to the WTO and deepening of world economy integration,volumes of China’s international trade has increased sharply. As an important financialtool in international trade and settlement.Documentary Credit has been widely used inthe reality fields.Among so many international settlement tools, credit has been considered moresecure. In fact, there are lots of disputes and problems which are led by the fraud f DC.Some criminals use the DC’s characteristics and loopholes in the system to make thecredit fraud, and thereby caused a great economic loss.Meanwhile,it has disturbed themarket order. Among them, the soft clauses in DC are common forms of fraud. DC withsoft clauses are the special types of DC.Its existence has certain necessity.Not all the DCwith soft clauses are frauds. However, the soft clauses of DC make the uncertainly of DCto settlement.Foreign exchange receipts easily generate discrepancies, trading initiative isalmost in the hands the applicant. If the beneficiary lower their guards,there may be hugelosses. Soft clause itself can be the future and mentality in deception, so, even if there areno other forms of acts of hiding and fabricating truth, the establishment of fraud crime ofDC will be confirmed. In judging of whether the behavior of DC soft clauses is used tocommit a crime,the important identification should be the purpose of the applicant andthe forms of expression of soft clauses.There are many forms of soft clauses of DC and all bring the uncertainties and risksto the effective of DC and international settlements. Beneficiary should count oninvestigating importer’s credit requirements, good reputation of the issuing bank, payingattention to the terms of the contract, auditing DC,and ordered to pay in order to guardand the avoid the risks caused by soft clauses. Based on the analysis of several typicalsoft clauses, this paper intends to bring the solutions to avoid risks and to help and guideour nations’ divisions to recognize the traps of foreign illegal merchants.This paper is divided into five parts. The first part introduces the researchbackground and research methods of the paper. The second part introduces the basicconcepts of credit, the reason it is created, the trait and specific classification. The thirdpart introduces two representative of soft clauses of DC fraud cases. The fourth part summes the cases and the existence question and the reason that. The fifth part issummary and recommendation. The whole paper is to summarize and put forwardpreventions and suggestions of the soft clause in DC frauds.