Research On LC Soft Clauses And Its Judicial Remedies

Soft clauses in LC seriously damage the stability of LC, and result in great risks and losses to the beneficiary. There are lots of research on soft clauses, however, the researches are mostly superficial and mainly list recognition and prevention while lack deep theoretical analyses. Or the theoretical analyses fail to distinguish LC and its basic contract. Most theories hold the point of view that soft clauses constitute LC fraud to seller (beneficiary) and that the soft clause may apply the judicial remedy of LC fraud based on the conclusion that the seller (beneficiary) providing fraudulent documents constitutes LC fraud to the purchaser (applicant).This thesis distinguishes LC and its basic contract, and deeply researches on their legal nature respectively. Based on the research results, judicial remedies are provided in the hope of improving the LC system.This thesis consists of five chapters:Chapter one briefly introduces the fundamentals of LC and analyzes the legal nature of LC, and concludes that LC is a special contract between issuing bank and beneficiary of LC, which constitutes the basis for further analysis of the legal nature of soft clauses in latter parts of this thesis.Chapter two gives general introduction to soft clauses in LC. This chapter introduces the definition of soft clause and the reason for usage of soft clauses by the purchaser (applicant), and classifies soft clauses for the purpose of easily identifying soft clauses.Chapter three analyzes the legal nature of LC with soft clause. This chapter lists current standpoints on LC with soft clauses and comments on these standpoints. This chapter also brings forward and analyzes the standpoint that LC with soft clauses is an obvious unjust contract on the basis that LC is a special contract.Chapter four analyzes the legal nature of the basic contract of LC with soft clauses. This chapter respectively analyzes the legal nature of basic contracts with fraud purpose and without fraud purpose for providing soft clauses.Chapter five brings forward corresponding resolving measured to the losses suffered by the seller (beneficiary), including prevention measures and judicial remedies. Since current legal system doesn't specify corresponding judicial remedies, this chapter brings forward the judicial remedies based on its reasonability and justifiability. This chapter also provides several suggestions to improve LC system.