Soft-Clause

Soft Clause can also be called Pitfall Clause. A soft clause is an unfair clause in Letter Of Credit.

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 letter of credit independently and give the applicant (buyer) complete control over the proceedings of the letter of credit.

Soft Clauses in the documentary credit which make it impossible for the beneficiary (seller) to meet the conditions of the documentary credit on his own and independently of the purchaser. Example: The goods must be accepted prior to shipment by a representative of the buyer. The name of the representative is made known via an amendment in the documentary credit at a later stage. It is not recommended for exporters to agree to this type of condition.