Cracking the Soft Clause Problem in L/Cs in International Trade
The article explores the soft clause problem in international trade, including their definition, how to identify and handle them. Soft clauses may make the L/C lose its irrevocability or make it impossible for the seller to fulfill the L/C, and are usually used to shift market risks. To avoid such problems, ensure that the seller can control the issuance of all documents and that the buyer cannot take delivery of the goods before payment. At the same time, flexible means can be used to get the customer to cancel the soft clauses. Finally, when the customer uses an L/C for settlement, the exporter needs to carefully review the L/C terms to ensure that there are no inappropriate clauses.