chapter 9 terms of payment.ppt

Chapter 9Terms of Payment
Payment in international trade is much plicated than that in domestic trade.
The monly used method of payment in international trade is the L/C.
Besides the L/C, other modes of payment are also used in foreign trade.
Learning Objectives:
Know the definition and classification of the L/C
Understand the main procedures of the L/C
Know the other modes of payment in international trade
Grasp how to urge the establishment of the L/C
Grasp how to amend and extend the L/C
Master useful words, phrases and expressions
Section 1 Introduction
Payment by Letter of Credit
The other modes of payment
Requirements for writing
Payment by Letter of Credit
The definition and characteristics of L/C
The classification of L/C
The flowchart of the L/C
The definition of L/C
The Letter of credit used in international trade should always be panied by export documents or shipping documents, so it is called the Documentary Letter of Credit.
The definition of L/C
A documentary Letter of Credit is the written promise of a bank , on behalf of a buyer, to pay a seller the amount specified in the credit provided the seller can present plete set of documents set forth in the credit.
The definition of L/C
The terms and conditions of a Documentary Letter of Credit revolve around two issues:
The presentation of documents (that evidence title to goods shipped by the seller)
Make payment
The characteristics of L/C
L/C is a contract between the issuing bank and the beneficiary
Issuing bank provides the guarantee of payment with its credit.
L/C mainly deals with the documents instead of goods and services.
The classification of L/C
According to the time of payment:
Sight L/C requires the buyer to pay at sigh when the bill of exchange, which is drawn by the seller, is presented.
Time L/C allows a deferred payment within the specified time.
(2) According to the responsibility of the issuing bank:
Revocable L/C : can be amended, revoked or cancelled by