信用证中的软条款解析与应对策略

Case Description:

Tianjin Shenglu Trading Co.，Ltd in China signed a contract with The ZnO Company in UAE to export sanitary equipment on June 10，2019.The price term of the contract is FOB Tianjin，and total contract amount is US＄600，000.The contract payment clauses ran as follows:“The buyer shall issue an irrevocable L/C at sight in favor of the seller，indicating L/C shall be valid in China through negotiation within 15 days after the shipment effected”.On September 15，Tianjin Shenglu Trading Company received a letter of credit from the ZnO Company.The L/C stipulated that the port of destination is Dubai，the latest shipment date is October 31，2019，the L/C expired until November 15，2019，and the documents shall be valid in China through negotiation.The terms of the documents are as follows:“THE SELLER SHALL PRESENT A RELEASE FOR SHIPMENT CERTIFICATE ISSUED BY FINAL BUYER'S QA INSPECTOR WHOSE SIGNATURE MUST BE IN CONFORMITY WITH L/C ISSUING BANK RECORDS…”As stipulated in the contract，the buyer will send a representative to inspect before the goods delivery，so the salesman of Tianjin Shenglu Trading Company thinks that there is no problem with L/C.

On October 30，2019，Tianjin Shenglu Trading Company delivered goods as scheduled and obtained the delivery certificate.Then full set of documents under the L/C were presented to the Bank of China for negotiation.A week later，Tianjin Shenglu Trading Company received a notice of dishonor from the issuing bank，“Release for shipment certificate cannot be verified by the issuing bank.”The beneficiary suspected that the issuing bank deliberately refuses to pay because the signature was actually made by the buyer's representative.After that，the negotiating bank entrusted local bank staff to the issuing bank for actual inspection and verification，and found that the signature didn't match the reserved seal.The beneficiary contacted the buyer immediately to find out the whereabouts of the goods，only to find out that the buyer had taken the goods away from the forwarder designated by them.The seller neither received the payment nor lost the goods finally.

Question:

1.How to understand the soft clause of L/C?

2.What lessons can be learned from the case?

Answer:

1.The soft clause of L/C is a clause with additional conditions for the validity of L/C，or requiring the seller to present documents that cannot be obtained.It refers to adding a clause in the irrevocable letter of credit to make the exporter unable to deliver goods on time，according to which the applicant or the issuing bank has the initiative to unilaterally release the payment responsibility at any time，that is，the buyer controls the whole transaction completely，whether or not the payment is completely determined by the buyer's will.In this case，the clause “The seller shall present a release for shipment certificate issued by final buyer's QA inspector whose signature must be in conformity with L/C issuing bank records…”is a typical “soft clause”of L/C.Whether the exporter can get the signature or not depends entirely on the importer.

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2.This case is a typical case involving soft terms of letter of credit.The soft clause of letter of credit always brings trouble to the beneficiary，which makes the beneficiary unable to get payment.However，due to the inherent disadvantages of letter of credit，the poor management of the exporter and the self-interest purpose of the importer，the soft clause of letter of credit is common in the practice of foreign trade.L/C with soft clauses is a very risky tool and often used by lawbreakers when they cheat.It not only weakens the normal position of L/C in international trade settlement，but also makes exporters suffer from heavy economic losses due to inexperience or negligence.As for the soft clauses of L/C involved in this case，the buyer made signature on the seller's document by the wrong person，which made the exporter fall into a passive position at their disposal.Therefore，identifying the “soft clauses”of L /C and amending them are the basic business skills of foreign trade salesman when payment with L/C.Only in this way，the beneficiary can avoid unnecessary losses.In addition，the seller should select the trading partners and the issuing bank carefully，pay attention to their credit investigation，enrich the knowledge of soft clauses of L/C，can distinguish soft clauses.More importantly，the beneficiary must be very strict in L/C examination.

Learn from the case，firstly，the beneficiary should ensure that the customer can't pick up the goods before receiving the documents without payment.“1/3 original bill of lading have been sent to the applicant”and so on are obviously soft terms；secondly，ensure that “the beneficiary's document without applicant's help”，that is，the L/C does not stipulate what documents shall be signed and issued by the buyer.All documents shall be prepared by the beneficiary themselves，or issued by the official agency or another country.Any violation of this point can be regarded as soft terms，such as “buyer's inspection certificate”etc.

Common types of soft clauses are as follows （图6-8）.

图6-8　Common Types of Soft Clauses

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增强风险意识　保证国家利益

出口贸易中，货款的结算大于一切。在正式交易磋商前，要重视对交易对象的资信调查，防止上当受骗，避免钱货两空；交易中选择合适的贸易术语和支付方式，防范交易风险和信用风险；风险未知的情况下，充分利用货物运输保险和出口信用保险来规避风险。这要求未来的外贸业务员们，增加风险意识，严谨规范订立合同，认真细致履行合同，严格按照合同要求规范缮制、及时提交单据。尤其在信用证业务中，应严格做到单证一致、单单一致、单货一致，尽一切可能降低货款结算风险，保障国家利益和企业利益。