The L/c Soft Clause And Its Risk Prevention

The letter of credit is an universal method of settlement in the current international trade. It replaces the traditional commercial credit by the bank credit to undertake the responsibility of payment to the seller. It is a safer trade settlement way, but now the existence of soft clause has greatly weakened this function of bank credit and constitutes huge risk to exporters. So this article conducts the more thorough research to this question, attempts to analyze by turns embarking from the elementary theory of the letter of credit to the nature, the classification, the fraud exception theory, the reason for existence as well as the relief way of the soft clause. In view of the fact that the scholars hold inconsistent opinions of the nature of the soft clause of the letter of credit, key point of this article is to analyze the soft clause in aspects of the nature, the relief, the precaution and so on based on the research on the fraud theory and the fraud exception theory. In addition to the preface and the conclusion, this article covers three chapters discussing the elementary theory, the relief theory and the fraud exception theory of the soft clause of the letter of credit. The first chapter is about the elementary theory of the soft clause of the letter of credit which mainly discusses the cause, the nature and the classification of the soft clause of the letter of credit, and so that we can have a comprehensive understanding of the letter of credit. The second chapter is about the nature and the validity of the soft clause of the letter of credit which makes some elaboration on the nature of the soft clause and makes a probe into the validity of the soft clause. And the third chapter is about the relief and the risk precaution of the soft clause of the letter of credit, which makes some discussions on how to guard against the soft clause of the letter of credit from the angle of enterprises expounded in two aspects of self-construction and external cooperation.