Nyelvtanulás | Angol » Bills of exchange - Terms of payment

Bills Of Exchange A bill of exchange is an unconditional order in writing, addressed by one person (drawer) to another (drawee) signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed future time a sum of money to a specified person. Bills of Exchange can be transferred by endorsement. The person who transfers them is the endorser, the other one to whom it is transferred is the endorsee. Any endorser is fully liable for the bill and must pay it if the acceptor fails to pay. If an endorser does not want to be hold responsible for the bill, he writes a signature: without recourse to me. Bill of exchange must be presented for payment during business hours on the day they are due. If the date of maturity falls on Sunday or any other holiday, the bill is due on the last working day. If it falls on a bank holiday, the bill is due on the next working day. If the drawee refuses the bill or to pay on maturity, the bill is said to be

dishonoured and must be protested. The bill payable at a future time might sold to a bank or a discounting house, which pays the sum of the bills less interest and discounting charges. Terms of Payment There are four basic terms of payment used in foreign trade: 1. Payment in advance is the most advantageous for the seller and disadvantageous for the buyer. It is not very often employed, except when the goods represent high value 2. Documents against Payment is more often employed This means that the buyer and seller agree upon payment simultaneously with the delivery. Because of the distance between the partners the problem is solved so that while the goods have been dispatched and are on their way to the buyer, the documents are given to the buyer against payment of the countervalue. 3. The most usual method of payment is the Letter of Credit The banks (one in the seller’s country, one in the buyer’s country) are entrusted to carry out the task a Letter of Credit charges them

with. The procedure of establishing a Letter of Credit is the following> The buyer deposits a certain amount of money (covering the countervalue of the goods) in his bank and instructs it to open L/C in favour of the seller. The buyer’s bank informs the seller’s bank about a Letter of Credit opened in the seller’s favour and asks the bank to advise the seller about this fact. The L/C is valid to a certain date which is clearly indicated in it. Its amount can be paid to the beneficiary only if the conditions are fulfilled by him up to that time. The validity of the L/C can be extended. 4. Payment after delivery is just as disadvantageous for the exporter as payment in advance is for the importer. It is rarely used and is granted only to firms of reliable financial standing