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 Post subject: Pitfall Clauses (Soft Clauses) in L/C
PostPosted: 29 Jan 2010 10:49 
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Pitfall Clause can also be called Soft Clause. A soft clause is an unfair clause in Letter Of Credit .

Importers & Exporters Discuss International Trade Here

Soft Clause is a trap which lands the supplier in a passive position . These clauses usually make the beneficiary or supplier (seller) can not fulfill the requirement of the L/C independently and give the applicant (buyer) complete control over the proceedings of the L/C .

Pitfall Clauses (Soft Clauses) are very bad clauses in L/C, if you found Soft Clauses exist in L/C , ask the applicant to amend the L/C or reject the L/C .

Samples of Pitfall Clauses (Soft Clauses):

1.
CERTIFICATE OF QUALITY IN ONE ORIGINAL ISSUED AND SIGNED BY APPLICANT 25 DAYS BEFORE SHIPMENT WHOSE AUTHORITY AND SIGNATURE MUST BE IN CONFORMITY WITH RECORDS HELD IN ISSUING BANK

2.
INSPECTION CERTIFICATE ISSUED BY APPLICANT AND SIGNED BY THEIR AUTHORIZED OFFICERS CERTIFYING THAT THE GOODS HAVE BEEN INSPECTED BEFORE SHIPMENT,THE APPLICANT’S AUTHORIZED SIGNATURES ON THE INSPECTION CERTIFICATE MUST BE IN COMFORMITY WITH ISSUING BANK’S RECORD

3.
The certificates of inspection would be issued and signed by authorized the applicant of L/C before shipment of cargo, which the signature will be inspected by issuing bank.

4.
The goods will be shipped upon the appointing vessel by the applicant of L/C and adding a cable/telex amendment of L/C by issuing bank to advising bank, which an amendment should be negotiated accompanied with the original documents.

5.
The goods will be shipped upon receipt of shipping advice issued by opener of L/C appointing the name of vessel, which will be issued by way of an amendment to this credit by the issuing bank.

6.
Commercial invoice in triplicate, all duly signed and counter-signed by MR. ** and MR. *** of L/C applicant whose signatures must be in conformity with the specimen signatures held in *** bank.

7.
Quality confirmation issued and signed by authorized person of applicant (whose signature must be conform with that held in your file), certifying that goods are in good condition, and stating date, value, quantity of goods and dated not later than Sept, 10, 1998.


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