《國際貿(mào)易實(shí)務(wù)與操作》Chapter-6

國際貿(mào)易實(shí)務(wù)與操作

InternationalTradePracticeandOperation1Chapter6InternationalPaymentTeachingObjectives1.Identifytherisksofdifferentmethodsofpaymentininternationaltrade.2.Discusstheformandfunctionofbillofexchange,check,andpromissorynote.3.Explaintheproceduresofdocumentarycollection.4.Statethetypesofletterofcreditandtheproceduresofpayment.5.Outlinedifferentparties’responsibilitiesundertheletterofcreditpayment.2Section1Payment

OptionsTherearefourbasicmethodsofpayment:paymentinadvance,documentary(letterof)credit,documentarycollections,openaccount.3Section1Payment

Options1.PaymentinAdvanceThebuyersimplyprepaysthesellerpriortoshipmentofthegoods．Itprovidesthesellerwiththemostsecuritybutleavesthebuyeratgreatrisk.Cashinadvanceisusuallyawiretransferoracheck.4Section1Payment

OptionsRemittanceisanactoftransmittingmoney,bills,orthelike,toadistantplace,asinsatisfactionofademand,orindischargeofanobligation.Therearethreetypesofremittance:MailTransfer(M/T),(2)TelegraphTransfer(T/T),(3)DemandDraft(D/D).Fourpartiesareinvolvedintheremittanceprocess:theremitter,thepayee,theremittingbankandthepayingbank.5Section1Payment

Options2.Documentary(Letterof)Credit

Aletterofcreditisabank’scommitmenttopaytheselleraspecifiedsumonbehalfofthebuyerunderpreciselydefinedconditions．Lettersofcreditarethemostcommonformofinternationalpaymentbecausetheyprovideahighdegreeofprotectionforboththebuyerandtheseller.6Section1Payment

Options3.DocumentaryCollectionsAdocumentarycollectionissimilartoaninternationalcashondelivery(COD).Thesellershipsgoodstothebuyerbutsendsthedocuments,includingthebilloflading(titledocument),throughthebankswithinstructionstoreleasethemtothebuyeronlyuponpayment.Whenthebuyerobtainsthetitledocuments,hehastherighttotakeownershipoftheshipment．Letterofcreditbelongstobanker’scredit.Remittanceandcollectionbelongtocommercialcredit.Thebuyerisresponsibleformakingpayment,thesellerhandingoverdocuments.7Section1Payment

Options4.OpenAccountThebuyeragreestopayforthegoodswithinadesignatedtimeaftertheshipment,usuallyin30,60,or90days．8Section1Payment

Options5.HybridMethodsFrequently,tradingpartnerswilluseacombinationofpaymentmethods.Forexample,thesellermayrequirethat50%paymentbemadeinadvanceusingawiretransferandthattheremaining50%bemadebydocumentarycollectionandasightdraft.9Section1Payment

Options6.OtherPaymentMethods(Extension)Theconsignmentmethodrequiresthatthesellershipthegoodstothebuyer,brokerordistributorbutnotreceivepaymentuntilthegoodsaresoldortransferredtoanotherbuyer.Althoughthisistheriskiestsortoftransaction,itisnonethelesscommoninthetradeoffreshproduce.Countertrade(對(duì)等貿(mào)易〕isageneralnamegiventoavarietyofactivitiestopromotetradewithnationsthatareshortofconvertiblecurrency.Thebasicactivityissimilartobarter–theexchangeofgoodsforgoods–buttodayitismoresophisticatedthanthat.Thefollowingtypesofcountertradehavebeenidentified:compensationtrade,counterpurchase,buy-back,offset,switch,triangulardeals,andsoon.10Section1Payment

OptionsRiskDistributionoftheFourTermsofPayment11Section2BillsofExchangeThebillofexchangeisaspecializedtypeofnegotiableinstrumentcommonlyusedtoexpediteforeignmoneypaymentsinmanytypesofinternationaltransactions.Itactsasasubstituteformoney,andafinancingorcreditdevice.1.DefinitionofBillofExchangeAbillofexchangeisawritteninstrumentwhichcontainsanunconditionalorderwherebythedrawerdirectsthedraweetopayadefinitesumofmoneytothepayeeortohisorderondemandoratadefinitetime.12Section2BillsofExchange2.PartiesInvolvedBasicallythreeparties:drawerdraweepayeeOtherparties:acceptor,endorser,endorsee,bearer,etc.13Section2BillsofExchange3.TypesofBillsofExchangeAccordingtothetenor,therearetimeandsightbills.Accordingtotheacceptors,therearetradeacceptanceandbank’sacceptance.Anacceptanceisatimedraftthathasbeenacceptedandsignedbythedrawee(thebuyerorthebank)forpaymentatmaturity．TradeacceptanceBanker’sacceptance

14Section2BillsofExchangeCase6-1NORTONv．KNAPPFACTS：Nortondeliveredamill,priceat$80,toKnapp．WhenKnappdidnotpaythe$80,NortondrewadraftonKnapppayableonsight．WhenKnappreceivedthesightdraft,hewrote“Kissmyfoot”onthebackandsignedhisname．ClaimingthatKnapp’swritingandsignatureconstitutedavalidacceptance,Nortonsuedfortheunpaiddraft．ISSUE：Ifabillispresentedtoadraweeforhisacceptance,willhebeconsideredanacceptorifhedoesanythingtoitorwithitwhichdoesnotclearlyindicatethathewillnotacceptit?15Section2BillsofExchange2.4ChecksWhenthedraweeofabillofexchangeisabank,thebillisknownasacheck.Checksarealwayspayableondemand(SeeFigure7).ChecksaredistinguishedfromdraftsintheUnitedStatesonthisbasisbytheUCC，whiletheBritishtradition，usingthesamefeatures，treatsthemasaseparatetypeofbillofexchange.16Section2BillsofExchangeCase6-2AboutOverdraftFacts:O’BanionwastheownerandoperatorofSuperiorofConstruction.WhenSuperiorranintofinancialproblems,O’BanionarrangedwithMerchantsBanktohonoroverdraftsonthecorporateaccount.O’Banioncontinuedtowritechecks.Whentheaccountbecameoverdrawn,however,thebankrefusedtopaythechecks.O’Banionsufferedfromabadcreditreputation,andSuperioreventuallywentoutbusiness.Question:CanO’Banionholdthebankliableforfailingtopaythechecks?17Section2BillsofExchange5.PromissoryNotesApromissorynoteisaninstrumentwrittenandissuedbyadrawer,promisingtopayunconditionallyafixedamountofmoneytoapayeeorholderatthesightoftheinstrument.Thedifferencebetweenapromissorynoteandabillofexchangeisthatthemakerofanotepromisestopersonallypaythepayeeratherthanorderingathirdpartytodoso.18Section2BillsofExchange6.ConventionsGoverningNegotiableInstruments(1)BillsofExchangeActinBritainanditsformercolonies,suchasCanada.(2)TheGenevaConventions:ConventionProvidingaUniformLawforBillsofExchangeandPromissoryNotes,1930ConventionProvidingaUniformLawforCheques,1931(3)UnitedNations:UNCITRALConventiononInternationalBillsofExchangeandInternationalPromissoryNotes,198819Section2BillsofExchangeCase6-3DestructionofOriginalNoteDoesNotEliminateRighttoEnforcetheNoteFactsIn2003,WachovialoanedMcNamee$150,000.Hesignedapromissorynote.Atsomepoint,Wachovialostordestroyedtheoriginalnote.Thenotematuredin2005andWachoviaassignedittoAtlanticNationalTrust.AtlanticdemandedMcNameerepaytheremainingprincipalbalanceof$138,620plusinterest.Atlanticcannotproducetheoriginalnote,buthasacopy.IssueMcNameecontendedthatbecausetheoriginalnotewasdestroyed,thenotecannotbeenforced.Atlanticsued.ShouldWachovialpaythemoney?20Section3DocumentaryCollectionsTherolesandresponsibilitiesofthebanksinthecollectionprocessarelaiddownintheInternationalChamberofCommercepublication,UniformRulesforCollection(ICCNo.522).Theserulesareprivaterules,andshouldbespecificallyinvokedbyexpressincorporationintothecollectionorder.

21Section3DocumentaryCollections1.PartiesInvolvedTherearefourmainpartiestoadocumentarycollectiontransaction,eachpartymayhaveseveralnames．Theprincipal:drawer/seller/exporterTheremittingbank:principal’sbankThecollectingorrepresentingbank:buyer’sbankThedrawee:buyer/importer22Section3DocumentaryCollections2.BasicDocumentaryCollectionProceduresSampleFig6-103.3TheSWIFTSystemSocietyforWorldwideInterbankFinancialTelecommunication23Section3DocumentaryCollections3.TypesofCollectionAccordingtothedocumentsincluded:cleancollection,ordocumentarycollections.Accordingtothetenorofthedraft:documentsagainstpayment(D/P),ordocumentsagainstacceptance(D/A).24Section3DocumentaryCollections4.CollectionOrderThecollectionorderisthekeydocumentpreparedbythesellerspecifyingthetermsandconditionsofthedocumentarycollection．Fig.6-1125Section3DocumentaryCollectionsCase6-4Winemakerv.BankFACTS：J&JWine,anAmericanwineimporter,placedanorderforwinefromwinemakerRheinbergKellereiGmbH,aGermancorporation．PaymentwastobemadethroughaletterofcollectiontobesentfromaGermanbanktoBrooksflieldNationalBank.PaymentwastobedueuponarrivalofthewineinHouston．OnMarch27,1986,thecollectionletterwasforwardedtoJ&J.J&Jdidnotpaybutaskedforanextension．ThewinearrivedinportonMarch31,andtheBankwasneverinformedofthearrival．J&Jneverpaidandeventuallywentoutofbusiness．TheBankneverinformedRheinbergofJ&J’sfailuretopay.Meanwhile,thewinedeterioratedtoanundrinkablecondition.RheinbergsuedtheBankfornegligence．ISSUE：Mayacollectingbankinaninternationaltransactionbeliabletothevendorforfailingtonotifyitofthevendee’sfailuretopayaninvoice?26Section4LettersofCreditLetterofCredit(L/C)istypicallyirrevocable,whichmeansthatoncetheL/Cisestablisheditcannotbechangedwithouttheconsentofbothparties.TheL/Cwilldescribeonlythoseitemsthatmustbereflectedontheshipping,insurance,andcustomsdocumentstobeforwardedbytheseller.Thebankisinthebusinessoffacilitatingpayments,notrefereeingtradedisputesnorinspectingshipments．27Section4LettersofCreditPartiesInvovedThreeParties:Applicant,Issuingbank,Beneficiary(thesellertowhomthecreditisaddressed).OtherParties:Advisingbank:abankinthebeneficiarycountry,advisesthebeneficiaryoftheexistenceofthecreditbutattractsnoliabilityunlessitbecomesaconfirmingbankConfirmingbank:

Thebankthatindependentlypromisestopay,accept,ornegotiateacredit,asappropriate,whenthedocumentsspecifiedinthecreditarepresentedtoit.28Section4LettersofCreditIdentifythemessageintheSampleLetterofCreditLetterForm:Fig6-12(P105)Draftsdrawnunderletterofcredit:Fig6-4(P93),Ex(P213)

2.SWIFTForm:supplement29Section4LettersofCreditCase6-5InSopromaSpAv.Marine&AnimalBy-ProductsCorporation,thepartiesenteredintoacontractforthesaleandpurchaseof1000tonsof:"...ChileanFishFullmeal,steamdriedminimum70%,2%sandmax;10%moisturemax,freeofsalmondlaatthetimeofshipment;aspersamplesent"Thedocumentsdescribedthegoodsinthefollowingmanner:Commercialinvoices"ChileanFishFullmeal,70%protein”BillsofLading"Chileanfishmeat”AnalysisCertificate"Fishmeatprotein69.7%”30Section4LettersofCreditCase6-5QualityCertificate"Steam-driedfishmealProtein67%minimum”HealthCertificate"Fishmeat”InvoicetoSellers"ChileanFishmeatminimum67%protein"

Question:Wouldthebankacceptthedocuments?31Section4LettersofCredit4.2LawandPracticeinLettersofCreditThegoverninglaw:theICCUniformCustomsandPracticeofDocumentaryCredits(UCP600)revisedin2007.(1)ThePrincipleofIndependence:Acreditbyitsnatureisaseparatetransactionfromthesaleorothercontractonwhichitmaybebased.(2)ThePrincipleofStrictCompliance(3)Banksdealwithdocumentsandnotwithgoods,servicesorperformancetowhichthedocumentsmayrelate.(4)TheBankundertakesthepaymentfirst.TheopinionsoftheICCBankingCommissionconstitutetheprivateequivalentofjurisprudenceontheinterpretationandapplicationoftherules．32Section4LettersofCreditCase6-6PowerCurberInternationalLtdv.NationalBankofKuwaitFacts:InthePowerCurbercase,certaindistributorsinKuwaitboughtcertainequipmentfromPowerCurber,whichcarriedonbusinessinNorthCarolina,USA.AnirrevocableletterofcreditwasissuedbytheNationalBankofKuwait.TheBankofAmericainMiamiwasinstructedtoadvisethecredittothesellerthroughabankinNorthCarolina.Althoughtheequipmentwasdulydelivered,thebuyersinKuwaitbroughtacounterclaimagainstthesellersinKuwait,andobtainedaprovisionalattachmentorderwherebythebankwaspreventedfromhonoringtheirrevocablecredit.ThebankhadaregisteredaddressinLondon;thusthesellerssueditintheEnglishcourts.Issue:Couldthebankrefusetopayunderletterofcredit?33Section4LettersofCreditCase6-7UNITEDBANKLTD.v.CAMBRIDGESPORTINGGOODSCORP.FactsandBackgrounds:InApril1971,theappellantCambridgeSportingGoodsCorporation(Cambridge)enteredintoacontractforthemanufactureandsaleofboxinggloveswithDukeSports(Duke).Dukecommitteditselftothemanufactureof27,936pairsofboxingglovesatasalepriceof$42,576.80,andarrangedwithitstwoPakistanibankersforfinancingofthesale.Cambridgewasrequestedbythesebankstocoverpaymentofthepurchasepricebyopeninganirrevocableletterofcreditwithitsbank,ManufacturesHanoverTrustCompany(Manufactures).Followingconfirmationoftheopeningoftheletterofcredit,DukeinformedCambridgethatitwasimpossibletomanufactureanddeliverthemerchandisewithinthetimeperiodrequiredbythecontract,andsoughtanextensionoftimeforperformance.Cambridgerepliedthatitwouldnotagreetoapostponeofperformancebecauseofitsresalecommitmentsand,hence,itpromptlyadvisedDukethatthecontractwascanceledandtheletterofcreditshouldbereturned.34Section4LettersofCreditDespitethecancellationofthecontract,theManufacturesreceiveddocumentsfromthosetwoPakistanibankers[documents]purportingevidenceofshipmentoftheboxingglovesunderthetermsofcanceledcontract,anddraftsdrawnbytheDukeuponManufacturersandmadepayabletothosetwoPakistanibanks.AninspectionupontheshipmentsrevealedthatDukehadshippedold,unpadded,rippedandmildewedglovesratherthanthenewglovesasagreedupon.CambridgethencommencedanactionagainstDukeandobtainedapreliminaryinjunctionprohibitingthelatterfrompayingdraftsdrawnundertheletterofcredit;subsequently,Cambridgeleviedonthefundssubjecttotheletterofcreditandthedraft.Disputes:ThosetwoPakistanibankssuedCambridgeandwantedtoobtainpaymentsofthedraftsontheletterofcredit.ThetrialcourtdirectedaverdictinfavorofthebanksonthegroundthatCambridgehadnotmetthatburdentodemonstratethatthebanksthemselveshadparticipatedintheseller’sactsoffraud.CambridgethenappealedtoCourtsofappealsofNewYork.Question:Whatwouldbetheresultofthecase?35Section4LettersofCreditCase6-8Voest-AlpineenteredintoacontracttosellgoodstoaChinesecompany.Thesalepriceofthegoodswas$1.2million.TheChinesebuyerarrangedfordefendantBankofChinatoissuealetterofcreditinfavoroftheseller.Thesellerhadpresenteddocumentscontainingthefollowingdiscrepancies:(1)theLCindicatedtheseller's/beneficiary'snameasVoest-AlpineU.S.A.TradingCorp.whilethedocumentspresentedindicatedtheseller'snameasVoest-AlpineTradingU.S.A.Corp.(i.e.,the"TradingU.S.A.Corp."portionwasinverted);(2)theportofdestinationofthegoodsincertainofthedocumentswasmistakenlyidentifiedas"Zhanjiagang"or"Zhangjiagng"insteadofthecorrectname,"Zhangjiagang";(3)certaindocumentswerenotmarked"original"asrequiredundertheLCand(4)theLCnumberonthefaxpresentedtothebankwasLC95231033/95insteadofLC9521033/95asindicatedintheLC.

36Section4LettersofCreditTheproblemforthesellerwasthatbythetimetheproductwasreadyforshipmenttothebuyer,themarketpriceoftheproducthaddroppedsignificantlybelowthecontractprice.Thebuyerhadaskedforapricereduction;thesellerrefusedandshippedthegoods.ThedocumentswerereceivedbytheLCissuingbank,BankofChina,onAugust9,1995.OnAugust11,1995,BankofChinasentatelexidentifyingthediscrepancies.However,thetelexdidnotstatethatthebankwasrefusingthedocumentsandrejectingthedrawing.Instead,thetelexstatedthatthebankwascontactingtheLCapplicant/buyeraboutthediscrepancies.Belatedly,BankofChinasentanothertelexidentifyingthediscrepanciesandstatingthebank'srejectionofthedocumentsandrefusaltohonortheLCdrawingmorethansevenbankingdaysafterreceivingthefirstpresentationofdocuments.Result:TheUnitedStatesDistrictCourtfortheSouthernDistrictofTexasdirectedBankofChinatomakepaymenttothebeneficiary/seller.Why?37Section4LettersofCredit3.BasicDocumentaryCreditProcedureOpeningaDocumentaryCredit(applicationformFigure6-13)Thebuyer’sinstructionstotheissuingbankshouldbegiveninclear,professionalwording,andshouldpertainonlytodocumentation,nottothegoodsthemselves．Thecontentoftheapplicationformshouldcontainthefollowinginformation:Beneficiary,Amountofthecredit,ValidityPeriod,Beneficiary’sBank,TypeofPaymentAvailable,DesiredDocuments,NotifyAddress,MerchandiseDescription,ConfirmationOrder,etc..AmendmentWhenthesellerreceivesthedocumentarycredititmustbeexaminedcloselytodetermineifthetermsandconditions(1)reflecttheagreementofthebuyerandseller,and(2)canbemetwithinthetimestipulated．Amendmentsmustbeauthorizedbythebuyerandissuedbytheissuingbanktothesellerthroughthesamechannelastheoriginaldocumentaryletterofcredit.38Section4LettersofCreditSettlementSettlementreferstotheprocessofpaymentofthebeneficiary(ies)tothecreditafter

presentationofdocumentsunderthecredit．TheprocedureofpaymentbyL/C:(1)TheexporterandtheimporterconcludethesalescontractandchooseL/Cpayment;(2)TheimporterappliesfortheL/C;(3)TheissuingbankestablishestheL/C;(4)Theadvisingbanknoticestheexporter(beneficiary);(5)Theexportermakesdeliveryandpreparesforthedocuments;(6)Thenegotiatingbanknegotiatesthedrafts;(7)Thenegotiatingbankdispatchesdocumentstotheissuingbankandasksforreimbursement;(8)Theissuingbankacceptsthedocumentsandpaysthenegotiatingbank;(9)Theissuingbanksendspaymentnoticetotheapplicant;(10)Theapplicantreimbursestheissuingbank.39Section4LettersofCreditTypesofLettersofCreditLettersofcreditcanbequiteflexibleinthedesignandeachisusedforaspecificpurpose.Basedondifferentclassificationmethods,thereareanumberofdifferenttypesofL/Cwhicharelistedasbelow.40Section4LettersofCredit

Classification

WhetherthecreditcanberevokedWheatherconfirmedbyanotherbankAccordingtothemodeofavailabilityWhetherthecreditcanbetransferred

Types

RevocableL/CInrevocableL/CConfirmedL/CUnconfirmedL/CSightPaymentL/CAcceptanceL/CTransferableCreditNon-transferableCredit41Section4LettersofCreditAccordingtospecialfunctionclause:RedclausecreditGreenclausecreditStand-bycreditBack-backdocumentaryCreditReciprocalCreditRevolvingCredit42Section4LettersofCreditCase6-9LanguageusedinletterofcreditFacts“BancodoBrasil”issuedaletterofcreditin1994tosupportpaymentsofCompServiceto“3Com”.Thelettercontainedan"evergreenclause"thatprovidedautomaticrenewalofthecreditoneveryMay20unlessBancosent3Com“writtennoticethat[Banco]...electednottorenewtheletterofcreditbeyondsuchdate.”BancoextendedcredituntilitsentanoticeinearlyMay1996statingthatitwas“requestingcancellationofthestandbyletterofcredit”andthatit“cannotaccepttheautomaticrenewal”ofthecreditto3ComonbehalfofComp.Afterthenotice,3CompresentedBancowithdraftsforthefullamountofthecreditfordebtsowed3CombyComp.BancogavenoticeofdishonorofthedraftsonthegroundsthatthecreditexpiredonMay20,1996.Disputes3Comsuedforwrongfuldishonor.Thedistrictcourtheldfor3Com,rulingthatanoticeofnon-renewalmustbe“clearandunequivocal,”whichBanco’snoticewasnot,so3Comwasduepayment.Bancoappealed.Question:Whatwouldbetheresult?43Section4LettersofC