Dry goods | What is the "soft clause" of credit cards?
- Author:sofreight.com
- Source:sofreight.com
- Release Date:2023-08-15
01 What is a letter of credit?
Credit documents refer to a written voucher for banks to guarantee the responsibility of paying payment according to the request of the importer (buyer) to the exporter (seller), which is a more common settlement method in international trade.
The Soft Clause refers to some restricted clauses stipulated in the letter of credit, or some terms are unclear and the expression is unknown, so that the opening of the certificate has a basis for free, which is very unfavorable to the beneficiary.
If these "soft clauses" are not discovered in time during credit transactions, they may face the loss of "money and goods".
02 What are the common "soft clauses"?
In international trade, credit fraud is often added to the restrictions set by the buyer (the applicant of the license) to the bank payment conditions of the bank's bank payment, that is, the "soft clause" in the letter of credit.
In this way, the bank credit guarantee payment conditions enjoyed by the seller have become the condition for the buyer's commercial credit decision to pay.The soft bar in the letter of credit was originally added by the buyer to prevent the seller from fraud or prevent the goods provided by the seller from not in line with the contract.
However, once these soft clauses are loaded on the letter of credit, the irrevocable letter of credit becomes a withdrawal letter of credit, which is extremely harmful to the seller.my country's export companies must attach great importance to the following types of credit soft clauses.
01 Terms of the category of no effect
For example, a letter of credit is required to be notified separately, or obtained relevant authorization letters, or the approval of relevant local departments to take effect to take effect.
02 Loss of goods category
For example, 1/3 of the bill of lading and air transport bills.
03 Requires importers or related parties to cooperate with clause clauses
For example, unconventional cargo inspection reports, quality inspection certificates, etc. are based on other credit certificates.
04 Conditions Limited Class Terms
For example, requiring specific routes, boat age, or submitting specific types of transportation documents.
05 Self -conflict clauses
For example, the joint transportation billing is allowed and the ship is prohibited.
03 How to avoid "soft clauses"?
1 Carefully review the order, find "soft clauses" early, and timely require changes.
2 Choose a bank with good reputation, and big banks often have more security.
3 Select buyers with better credit, use credit reports and other means to "know and know".
Credit documents refer to a written voucher for banks to guarantee the responsibility of paying payment according to the request of the importer (buyer) to the exporter (seller), which is a more common settlement method in international trade.
The Soft Clause refers to some restricted clauses stipulated in the letter of credit, or some terms are unclear and the expression is unknown, so that the opening of the certificate has a basis for free, which is very unfavorable to the beneficiary.
If these "soft clauses" are not discovered in time during credit transactions, they may face the loss of "money and goods".
02 What are the common "soft clauses"?
In international trade, credit fraud is often added to the restrictions set by the buyer (the applicant of the license) to the bank payment conditions of the bank's bank payment, that is, the "soft clause" in the letter of credit.
In this way, the bank credit guarantee payment conditions enjoyed by the seller have become the condition for the buyer's commercial credit decision to pay.The soft bar in the letter of credit was originally added by the buyer to prevent the seller from fraud or prevent the goods provided by the seller from not in line with the contract.
However, once these soft clauses are loaded on the letter of credit, the irrevocable letter of credit becomes a withdrawal letter of credit, which is extremely harmful to the seller.my country's export companies must attach great importance to the following types of credit soft clauses.
01 Terms of the category of no effect
For example, a letter of credit is required to be notified separately, or obtained relevant authorization letters, or the approval of relevant local departments to take effect to take effect.
02 Loss of goods category
For example, 1/3 of the bill of lading and air transport bills.
03 Requires importers or related parties to cooperate with clause clauses
For example, unconventional cargo inspection reports, quality inspection certificates, etc. are based on other credit certificates.
04 Conditions Limited Class Terms
For example, requiring specific routes, boat age, or submitting specific types of transportation documents.
05 Self -conflict clauses
For example, the joint transportation billing is allowed and the ship is prohibited.
03 How to avoid "soft clauses"?
1 Carefully review the order, find "soft clauses" early, and timely require changes.
2 Choose a bank with good reputation, and big banks often have more security.
3 Select buyers with better credit, use credit reports and other means to "know and know".