Payment in Overseas Trade The exporter will not wish to part with the goods until he has received payment or at least confirmation that his draft has been accepted by a creditworthy entity such as a bank. The buyer, on the other hand, will wish to postpone payment until the goods or documents are in his possession control. In order to minimise the risks […]
Nature of Bill of Exchange The key characteristic of a bill of exchange is that it is an unconditional obligation to pay. Payment cannot be refused because of some alleged failure to perform the transaction for which the Bill of Exchange is payment. A bill of exchange may be payable immediately or on or by a certain date. This time […]
Uniform Rules for Collection The seller may in international sale request his bank to collect the price which may be paid by way of acceptance and payment of the bill. The bank may collect it through its own representative branch or a correspondent bank. The bank will require clear instructions in a form cover how it should handle the document. […]
Overview Letters of credit, often called bankers’ commercial credits are a common method of payment for goods in export sales. The buyer arranges for payment through a bank, usually in the seller’s country, on the presentation of specific documents usually the bill of lading and other transport documents and on the performance of any other conditions specified and advised to […]
Issuing Bank Undertaking Provided that the stipulated documents are presented to the nominated bank or to the issuing bank and that they constitute a complying presentation, the issuing bank must honour if the credit is available by: sight payment, deferred payment or acceptance with the issuing bank; sight payment with a nominated bank and that nominated bank does not pay; […]
UCP Rules In international trade, the documents will commonly comprise a bill of lading which gives title to the goods and related documents. This facilitates the exchange of the payment instrument for the documents to the goods, which carry the entitlement to the possession and ownership of the goods themselves. The Uniform Custom and Practice for Documentary Credits (UCP) is […]
Bank Guarantees A bank guarantee may be required in an export sale. The buyer may be required to obtain a guarantee in favour of the seller under the sale contract. It may be provided that the guarantee is to take effect if no letter of credit or equivalent assurance of payment is provided within a stated time period. A buyer […]
Trade Credit Insurance Credit insurance, where available, seeks to cover the risk that the purchaser may become insolvent or otherwise default on payment. Credit insurance operates in a similar fashion to a letter of credit to some extent. Trade credit insurance is not widely available in Ireland. Historically, it has been considered expensive, time-consuming to administer and had narrow policy […]