Судоводы - 9 семестр / Видищева Т.В., Монастырская О.И. - English in Maritime Business and Law (2014)

SWIFT -банковская компьютерная система для международных банковских

переводов)

T h e B ill o f E x c h a n g e (B /E )

A B/E is an unconditional order from one person to another to pay a certain amount at a certain time. The m oney can be paid either to the person w ho gave the unconditional order or to a third party. B/E can be used for either dom estic or foreign trade.

T h e p a rties to a B /E are: a drawer w ho m akes out the B /E and sends it to the drawee

(the person	w ho has to pay it). He m ay send 2 copies {thefirst and second bill o f exchange)
in case one	gets lost.

Each B/E belongs to a certain category, depending on the tim e at w hich it matures (has

to be paid).
1.		A sight bill (draft) is paid on presentation. It includes the w ords “ P a y						a t sig h t”. The
draw ee	has to	pay as soon as the		draft is presented (as soon as he sees			it). A B /E	which
hasn’t been paid yet is called a draff, an accepted B/E is called an acceptance.
2.		Time bills are payable at a fixed or determ inable future tim e. There are 2 types of
tim e bill:
a) a term bill is payable at a certain num ber o f days after it is presented to the drawee,
e.g. “Pay at 60 days after sight”.
b) a date bill is payable at				a certain num ber o f days after it w as draw n, e.g. “pay at
60” .
3. A clean bill is one that is not accom panied by shipping docum ents.
4. A dishonoured bill is one that is not paid on the due date. In						this	case the exporter
w ill protest the bill,			i.e. he will	go to a notary,	a lawyer, w ho w ill	take	legal actions to
recover the debt.
5. Bills can be negotiable if the draw er endorses the bill, i.e. the bill becomes payable
to the person w ho owned it.
A	sig h t	d ra ft	is paid on	presentation.	In a documents against payment			(D/P)

transaction, the sight draft is presented to the importer with the shipping documents, and the im porter pays imm ediately, i.e. ’on presentation’ or ‘at sight’.

D o cu m en ts a g a in st p a y m en t (D /P )

The buyer needs the transport documents before he can take possession o f the goods he has purchased, but is only given them after paying a sight bill draw n by the seller.

D /P tr a n sa c tio n is effec ted as follow s:

1. T he seller sends the goods to the carrier (ship owner, airline, etc.)

2. T he carrier gives the necessary transport documents to the seller and transports the goods to the buyer’s country.

3. T he seller collects any other transport documents w hich m ay be necessary and gives them to his bank (the remitting bank) together with a sight draft.

4. T he rem itting bank sends the transport docum ents and the draft to the buyer’s bank (the collecting bank). T he buyer is notified when they arrive.

5. T he buyer pays the sight bill and receives the transport docum ents in return. H e can then take the transport docum ents to collect his goods from the carrier in his country.

6. The collecting bank sends the payment to the remitting bank. The amount is credited to the

seller.

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This means that if the buyer doesn’t pay, he doesn’t get the goods. This minimizes the risk for the seller, because if the buyer doesn’t pay, the seller can ask the collecting bank to find another buyer.

In theory this minimizes the loss for the seller, but may be a problem if he is exporting perishable goods, for example.

D/P holds a certain risk for the buyer, because he doesn’t have the chance to examine the goods before he has paid for them. However, this risk can be minimized by asking the seller to arrange examination o f the goods by an inspection Co. before they are dispatched. The inspection Co. will then seal the goods and issue an inspection certificate, which has to be sent to the collecting bank with the transport documents.

1.What types ofpayments inforeign trade do you know?

2.In what way may they be made?

3.When are payments in advance used?

4.Whom are open account terms granted to?

5.What is the banker s transfer?

6.What is necessaryfor a customer to do while paying by banker’s transfer?

7.What is the bill ofexchange?

8.What are different types of the B/E? Define the situations which differ their use.

Exercise 2, Enumerate thefunctions o f D/P transaction

Seller Buyer Carrier Remitting bank Collecting bank

Exercise 3. Read the bill Answer thefollowing questions

The bill has already been accepted by the drawee, who has named a bank in London which he wants to use to clear the bill

(payee - лицо, получающее платеж; получатель денег по переводному векселю; ремитент)

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1.What type of draft is this?

2.How much is it for?

3.Who is the payee?

4.When must the draft be paid?

5.What is the rate of exchange?

If a customer can’t pay a bill, he must inform his supplier immediately; there is an example when a bill is not paid and no notice has been given, the supplier usually writes to the customer before protesting a draft. The expression “Refer to Drawer” means that the bank is returning the bill to'the drawer. (This expression is also used when a dishonoured cheque is retumed).The formal protest is to be made, which means that the drawer will contact a lawyer to handle the debt if payment is not made within the specified period of time.

Exercise 5. Scan the letter and define the main idea

Panton Manufacturing Ltd.

Panton W orks, H ounslow , Middlesex, T W 62B Q

Tel: [phone]	Registered No. England 266135
Cables: PANMAN
Telex. 21511
Fax: [phone]
Mrs B. Haas,	10th April 19—
B. HaasB. V..
Heldringstraat 180-2
Postbus 5411
Amsterdam 1007
NETHERLANDS
Dear Mrs Haas.	BÆ No. 1671

The above bill for £860.00 was returned to vis from our bank this morning marked 'Refer to Drawer'.

The bill was due on the 5th April and appears to have been dishonoured. We are prepared to allow you a further three days before presenting it to the bank again, m which time we hope that the draft will have been met.

If the account is still not settled, we will have to make a formal protest, which we hope will not be necessary.

Yours sincerely,

D. Panton

Managing Director

(Protest a bill - опротестовать вексель) Exercise 6. Match each item to its definition

1. Commission		A The date by which a bill must be paid
2. Drawer		B To sign a document passing rights in it to another person
3.	Time-lag	C A charge made on a percentage basis for services
4.	On a consignment note	D The person who is drawn up

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5.	Drawee				E	Delay, loss of time
6.	Due date				F	The person who draws a bill
7.	Endorse (to)				G	Without fixed prices
	1	2	3	4	5	6	7

Exercise 6. Translatefront Russian into English

1.Владелец векселя может продать его банку по номинальной стоимости.

2.Вы можете оплатить данный товар по текущему курсу обмена валюты.

3.Условия оплаты по открытому счету предоставляются покупателю с безупречной репутацией.

4.Вексель на сумму US $ 5, 000 не был оплачен в срок.

5.Если трассант индоссирует вексель, он становится оборотным.

6.Вексель должен быть оплачен в течение 30 дней после предъявления.

7.Акцепт - это письменное согласие на оплату платежного требования, т.е. взять на себя обязательство оплатить переводной вексель или тратту в срок. Оформляется акцептантом (acceptor) надписью на платежном требовании «акцептовано» и его подписью.

8.Переводной вексель с оплатой по предъявлению является международным платежным документом, расчеты по которому производятся немедленно.

Предполагается, что представление переводного векселя и его акцептование совершаются практически в одно и то же время. Если в кратчайший срок (до 5 дней) после представления документа акцептование не происходит, документ считается не принятым к оплате.

UNIT 5

TERMS OF PAYMENT IN FOREIGN TRADE

Part 2

Vocabulary

•Documents against acceptance - документы по принятию; передача права собственности после получения чека к оплате

• Letter o f credit - аккредитив

•Opening/issuing bank - банк-эмитент; банк, оформляющий аккредитив

•Advising bank - банк, производящий выплату по аккредитиву

•Beneficiary - бенефициар, получатель по аккредитиву

•Documentary credit - документарный аккредитив

•То honour the bill o f exchange- оплатить счет в установленный срок; выполнять обязательства

•То recover the goods - получить свой товар обратно

•Confirming bank - подтверждающий банк

•Cost and charges - стоимость и расходы

•Irrevocable L/C - безотзывный аккредитив

Exercise 1. Read the text and answer the questions

DOCUMENTS AGAINSTACCEPTANCE (D/A)

This term of payment is very similar to D/P. However, instead of sending a sight draft to his bank, the seller sends a time draft. In order to get the transport documents, the buyer only has to accept the draft. At maturity, he goes back to his bank and pays for the goods.

A D/A tr a n s a c tio n is e ffe c te d a s fo llo w s:

1.The seller sends the goods to the carrier.

2.The carrier gives the necessary shipping documents to the seller and transports the

goods to the buyer’s country.

3.The seller collects the other shipping documents and gives them to his bank (the remitting bank) together with a time draft.

4.The remitting bank sends the documents and draft to the collecting bank (the

buyer’s bank). The buyer is notified to when they arrive.

5.The buyer goes to his bank and accepts the time draft. In return, he is given the transport documents and can collect the goods.

6.At maturity, the buyer goes back to his bank and pays the B/E. The money is sent from the collecting bank to the remitting bank and credited to the seller’s account.

Obviously this is more favourable for the buyer than CAD (Cash against Documents) or P/D, as he can take possession of the goods before paying. However, D/A carries a considerable risk for the seller: if the buyer fails to honour the bill o f exchange, the seller probably won’t be able to recover the goods (2 or 3 months may elapse between the time the draft is accepted and the time it matures, e.g., in which time the buyer may have sold the

goods).

Moreover, taking legal action to recover the money is far more difficult on an international basis.

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LETTER OF CREDIT (L/C)

A letter of credit is a more binding method of payment.

A letter of credit is a promise made by th e	b u y e r ’s b a n k (the opening or issuing bank)
to send a certain sum of money to th e s e lle r ’s	b a n k (the advising bank), to be credited to

the seller, known as his beneficiary, provided he fulfils his part of the sales contract. It is also known as a documentary credit.

Documentary credits - letters of credit accompanied by documents - are widely used in the import/export trade.

There are two types of documentary credits: revocable - those that can be cancelled,

and irrevocable -	those	that can’t	be cancelled. The second type is more common in
overseas business transactions.
P a y m e n t b y	le tt e r	o f c r e d it is	e f fe c te d a s fo llo w s:

1. The buyer and the seller agree on all terms and conditions of the sales contract.

2. The buyer fills out a n a p p lic a tio n fo r m to open a letter of credit at his bank (see annexl, 2). The application form names the exporter (the seller) and states: the amount to be paid; the documents concerned; what the consignment consists of; whether the shipment is c.i.f., f.o.b.,etc; details of dispatch and any other documents involved (e.g. certificate of origin, consular invoice, certificate of quality); the length of time the credit will be available. The availability of the credit should take into account of how much time it will take to prepare and ship the goods.

3. The opening (buyers) bank opens the letter of credit and sends it to the advising (seller s) bank. If appropriate, the opening bank also asks the confirming bank to confirm the L/C.

4.The advising bank tells (advises) the seller that the L/C has been opened.

5.The seller checks that all the terms and conditions are correctly listed in the L/C.

6.The seller collects all the necessary transport documents {bill o f lading, insurance certificate, invoice, etc).

7.The seller gives the transport documents and a sight or time draft to his bank. The bank checks the documents against conditions and pays him. He can get his money now if the L/C is confirmed.

8.The advising bank checks that all the documents are correct and sends them to the opening bank with the cost and charges, which are calculated as a percentage of the total amount of the invoice, plus an extra charge if the letter is confirmed.

9.The opening bank checks the documents again and sends the payment to the advising bank.

10.The buyer pays (sight draft) or accepts the draft (time draft) and gets the shipping documents in return. With these, he can collect the goods from the carrier in his country.

1.Explain the differences and similarities between CAD (D/P) and D/A.

2. What are the advantages and disadvantages o f CAD (D/P) for the buyer?

3.What are the advantages and disadvantages o fD/A fo r the seller?

4.Which o f the various terms ofpaymentfor foreign trade is the safestfo r all parties and why?

5.What information should be included in the application form?

6.What is thefunction o f a confirming bank?

Exercise 2. Enumerate actions which must be fulfilled by the parties in documentary credit transactions. Use the verb+noun expressions

Seller Buyer Issuing bank Advising bank Confirming bank

Exercise 3. Read the letterfrom the importer (the buyer) to his bank. The importer writes to his bank opening the credit. Quote his requirements

N. Z. Business Machines Pty.

	100, South Street, Wellington
	Directors: C.M. Perimann, L.F. Drozin
	Telephone: [phone]
	Telex:60184BUSMAC
	Fax. [phone]
The Manager	Date: 3 May 19—
NewZealand Bank
Takapuna House
TakapunaStreet
Wellington8

Dear Sir,

Please open an irrevocable documentary credit for£22,000infavourof Delta Computers Ltd., England. Ihave enclosed your application formwith all the relevant details completed.

Please informmewhenyouhave made arrangements with your agents in

London.

Yoursfaithfully,

VA

M Tanner

N.Z Business Machines Pty.

Enel. Applicationfordocumentarycredit

At the same time as opening the credit at his bank, who will notify their agents in London, the importer (the buyer) writes to his supplier (the seller).

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Exercise 4. Read the letter and answer thefollowing questions

N. Z. Business Machines Pty.

100, South Street, Wellington

Directors: C M. Perimann, L.F. Drozin

	Telephone. [phone]
	Telex: 60184 BUSMAC
Mr G. James	Fax [phone]
Delta Computers Ltd.
Bradfield Estate	Date 5 May 19—
Bradfield Road
Wellingborough
Northamptonshire NN8 4HB
UNITED KINGDOM

Dear Mr James,

Thank you for replying to our enquiry of 19April and letting us know that the C2000 computers, Cat. No. D16 are available.

The terms you quoted are quite satisfactory, and you will find our order, 8815, enclosed. We have instructed our bank, New Zealand Bank, Takapuna Street, Wellington, to open an irrevocable letter of credit for £22,000 in your favour. This should cover c.i.f. shipment and bank charges, and the credit is valid until 10June 19—.

You will receive confirmation from our bank’s agents Eastland Bank Ltd, 401 Aldgate, London EC1, and you may draw on them at 60 days for the amount of the invoice. When submitting youi draft, would you please enclose the following documents?

Bill of lading (6 copies)

Invoice c.i.f. Wellington (4 copies)

A.R. Insurance Policy for £24,200

Please fax or telex us as soon as you have arranged shipment.

Yours sincerely,

M.Tanner

N.Z. Business Machines Pty.

Enel: Order 8815

1.When does the credit expire?

2.What should the beneficiary do to get the money?

3.What sort o f shipment is it?

4.W hat is the confirming bank?

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D. L. Cromer Ltd Central Trading Estate Staines

Middlesex TW19 4UP ]2 May 19—

Exercise 5. Match each item to its definition

1. Beneficiary					A. The date by which a bill must be paid
2. Days ofgrace					B . A credit which cannot be cancelled
3. Honour (to)					C. A load of goods sent by sea, road or air
4. Indemnify (to)					D .	To come to an end; to be no longer valid
5.	Irrevocable credit				E. To compensate a person or free him from liability
6. Shipment					F. The person benefiting by a draft
7.	Expire (to)				G. 3 days extra in which to settle a time bill
1	2	3	4	5	6	7

Exercise 6. Read this letter requesting credit, andfill in the blanks with the correct verb takenfrom the list below

Place	began	may be approached		have been cleared
Have been trading has passed			would be settled	had been established

The Sales Manager

Antonio Medina S.L.

C/Sagasta 1156

Barcelona 08317

Dear Mr Medina,

We (1)_________________ with you for the past year and during that time our accounts (2)_________________ by letter of credit. However, when we (3)_________________ our association with you, you mentioned that once a business relationship (4)_________________ , our accounts (5)_________________ by 60-day bill of exchange, documents against acceptance. We feel that sufficient time

(6)_________________ to allow this arrangement to be effected.

Please let us know before we (7)_________________ our next order, if these new payment terms are acceptable.

I enclose details of two referees, who (8)_________________ should you require trade references, and look forward to hearing from you.

Yours sincerely,

David Arnold

Accountant

Encs.

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Exercise 7. Translatefrom Russian into English

1.Аккредитив - документ, выписанный коммерческим банком (эмитентом) и свидетельствующий о том, что последний принимает на себя обязательство по оплате тратт, выставленных в соответствии с оговоренными условиями.

2.Аккредитив может быть подтвержденным (confïrmed) или неподтвержденным(ипсопйгшеб). Подтвержденным считается аккредитив, в соответствии с которым другой банк (отличный от банка-эмитента) принимает на себя

обязательства по оплате должным образом оформленных и представленных тратт. По неподтвержденному аккредитиву ответственность несет только банк-эмитент. Как правило, за подтверждение банк взимает соответствующую плату с заявителя или покупателя.

3.Вы должны открыть безотзывный аккредитив на сумму US$ 5,000 в пользу нашей компании в Центральном банке Вашей страны.

4.Каков срок действия Вашего аккредитива?- Аккредитив будет действителен в течение 60 дней.

5.Мы не получили от Вас полный комплект документов. - Все требуемые по аккредитиву документы были своевременно направлены в банк.

6.На каких условиях Международный инвестиционный банк предоставляет долгосрочный кредит?- Кредиты предоставляются на приемлемых условиях.

7.Эта сумма покрывает расходы, связанные с открытием и подтверждением Вашего аккредитива.

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