1. Chapter 3 Remittance 3.1 Definition and parties
3.2 Types of remittance
3.3 Application of remittance in international trade

2. 3.1 Definition and parties
At the request of its customer, a bank transfers a certain sum of money to its overseas branches or correspondent banks and instructs them to pay a named person or corporation domiciled in that country.

3. 3.1.2 parties
Remitter
The remitter is a party who request the bank to transfer the money to another party, the payee. The remitter is always a debtor in a transaction or an importer in international trade
Remitting Bank
Bank who accepts the remitter' request to transfer money to the payee through its overseas branch or correspondent bank. It locates in the same country with the remitter

4. Paying Bank
Bank who receives order from the remitting bank to pay the specified money to the payee
Payee or Beneficiary
The party who receives the money. The payee is always a creditor and an exporter in international trade.
outward remittance: from the view of the remitting bank
inward remittance: from the view of the paying bank

5. 3.2 Types of remittance 3.2.1 Mail Transfer( M/ T)
A mail transfer is to transfer funds by means of mail transfer advice or payment order sent by airmail to the paying bank, at the request of the remitter.
Mail transfer Advice
The payment order
实物展台：M/T advice（信汇委托书） & payment order（支付委托书）

6. Bank of China, Guangzhou Branch
Mail Transfer Advice
Bank of China, Guangzhou Branch
Please advice and effect the following payment less your charges if any. In cover, we have credit your A/C with us. (you are authorized to debit our account with you.)
TO:_______,
No. of M/T:______ ,TO be paid to______
Amount:________, Amount in Words:_____________
By order of:_______, Message:___________
For Bank of China,
Guangzhou Branch
signed

7. goods Remitter Payee proceeds 6. receipt 7. Payment
5.Notification of M/ T
1.M/T application
2.receipt
3.Payment order or M/T advice
paying bank
remitting bank
4.debit advice

8. 3.2.2 Telegraphic Transfer (T/T)
T/T refers to remittance by cable, telex or SWIFT. It is exactly the same as M/T, except that instruction from the remitting bank to the paying bank is transmitted by cable, telex or SWIFT instead of by mail.
Characteristics:
Faster, more expensive, safer.
It is often used when the remittance amount is large and the transfer of funds is subject to a time limit. Thus 90% remittance are done through T/T

9. Remitter
proceeds
Payee
6. receipt
7. Payment
1.T/T application
5.Notification of T/ T
2.receipt
3. payment order sent
by cable or SWIFT
paying bank
remitting bank
4.debit advice

10. T/T flowchart 6. Payment 5. receipt 2.receipt 7 debit advice proceeds
Payee
Remitter
4.Notification of T/T
1.T/T application
6. Payment
5. receipt
2.receipt
3. payment order sent
by cable or SWIFT
remitting bank
Paying bank
7 debit advice

11. Contents of cable or telex
FM:
TO:
DATE:
TEST:
OUR REF NO.:
NO ANY CHARGES FOR US OR YOUR CHARGES FOR BEN
PAY(AMT) VALUE (DATE) TO (BEN)
MESSAGE:
ORDER:
COVER:
Order is actually “by order of ” B/O, FM (the name of remitting bank)
TO: (the name of paying bank)
DATE: (the date of sending cable)
Cover (头寸拨付)，根据帐户设置情况而不同。If remitting bank establishes account with paying bank, then it is “debit our account with you”

12. An example: FM: Bank of Asia, Tianjin
TO: The Hong Kong and Shanghai Banking Corp.,Hong Kong
Date: 1st March
Test 1253 OUR REF.208TT0517 NO CHARGES FOR US PAY USD VALUE 2ND MARCH TO YOUR HAY WAY BUILDING BRANCH 58 STANLEY STREET HONGKONG FOR ACCOUNT NO FAVOUR PRECISION PHOTO EQUIPMENT LTD. HONGKONG MESSAGE CONTRACT NO.P10158 ORDER PHOTOGRAPH CO.TIANJIN COVER DEBIT OUR ACCOUNT WITH YOU

13. TO: the Chase Manhattan Bank N. A., New York
FM: Bank of China, Beijing
DATE: 30 Sep. 2013
TEST x x x OUR REF TT109900/03 PAY USD 200, VALUE 30 SEP. TO BANQUE NATIONAL DE TUNISIE TUNIS FOR CREDIT OF A/C NO. Y OF CORPORATION INTERNATIONAL DES EAUX ET ELECTRICITE DE CHINE MESSAGE REMIT FOR CUSTOMS DUTY ORDER CHINA INTERNATIONAL WATER AND ELECTRIC CORP BEIJING YOUR CHARGES FOR BENEFICIARY COVER DEBIT US

14. SWIFT: Society for Worldwide Inter-bank Financial Telecommunication
Member bank:
Among the member countries of SWIFT, the head offices of those banks which obtain the licenses of doing foreign exchange business can be applied to be member banks of SWIFT
Sub-member bank:
会员银行在海外的全资附属银行或持股份额达90％以上的银行，可以申请为sub－member bank。
Participant:
Non-bank financial institutes can applied to be participants. But participants are only allowed to use part of its messages
SWIFT：环球银行间金融电讯协会。是一个国际银行同业间非赢利的国际合作组织，总部在比利时的布鲁塞尔。成立于1973年，由北美和西欧15国的239家银行发起。目前，swift在全世界有130个会员国和4000多家会员银行，日处理SWIFT电讯250万笔，为会员提供快速，安全，标准化，自动化的通讯服务。

15. SWIFT银行识别代码
It is composed by 4 parts: bank code (4 letters);country code (2 letters); location code (2 letters or numbers representing the city);branch code (3 letters or numbers representing the city of the branch)
中国银行上海分行： BKCH CN BJ 300
中国农业银行江西分行 ABOC CN BJ 140
中国工商银行总行 ICBK CN BJ
交通银行总行 COMM CN SH
中国人民银行总行 PBOC CN BJ
中信实业银行总行 CIBK CN BJ

16. SWIFT电文格式分类 （message type）
10大类电文格式：
一 客户汇款和支票 （customer transfers and cheques）
二 银行头寸调拨 （financial institution transfers）
三 外汇买卖 （foreign exchange）
四 托收 （collections）
五 证券 （securities）
六 贵金属和辛迪加（precious metals and syndications）
七 跟单信用证和保函（documentary L/Cs and guarantees）
八 旅行支票（traveler's cheques）
九 银行帐务
十 SWIFT系统电报
每一类包含若干组(group)，每一组又包含若干格式（type）,每个电报格式由三位数字组成。

17. Chase Manhattan n.a. new York n.y.
An example of MT103(CUSTOMER TRANSFER)
M/T103
Date
130930
Sent to
CHAS US 33 REM
Chase Manhattan n.a. new York n.y.
:20/transaction reference number TT109900/96
:32A/value date,currency code,amount
USD 200,000
汇款人：china international water and electric corp.,委托bank of china 汇$200，000给收款人corporation international des eaus et electricite de chine 在Banque nationale de tunisie tunis的帐户Y 汇入行是大通曼哈顿银行纽约分行。

18. :50/ordering customer
CHINA INTERNATIONAL WATER AND ELECTRIC CORP BEIJING
:59/beneficiary customer
CORPORATION INTERNATIONAL DES EAUX ET ELECTRICITE DE CHINE
:57/account with bank
BANQUE NATIONAL DE TUNISIE TUNIS Y
:71A/ details of charges FOR BENEFICIARY
:72/ bank to bank information COVER DEBIT US

19. 3.2.3 D/D (Remittance by banker’s demand draft)
1. A remitter instructs the remitting bank to draw a demand draft on its overseas branch or its correspondent bank abroad ordering the latter to pay on demand the stated amount to the holder of the draft.
2. procedure

20. 4.Bank sight draft
remitter
payee
1.D/D application
5. Bank sight draft
2. Bank sight draft
6.payment
3. D/D advice
Remitting bank
Paying bank
7. Debit advice

21. The remitter submits a D/D application.
Upon receipt of the application, the remitting bank debits the customer’s account with the amount of the draft plus bank commission, draws a demand draft and gives it back to the remitter.
The remitting bank sends an advice by airmail to the drawee bank, instructing the latter to pay it on presentation of the original draft as well as how to reimburse it. Nowadays most banks usually omit airmailing the advice to the drawee bank.

22. (4)The remitter forwards the draft to the payee.
(5)The payee presents the draft to the drawee bank for payment.
(6)The drawee bank verifies the signatures, pay the draft, and claim back the amount that is paid according to its agency arrangement with the remitting bank.

23. 3. 中心汇票汇款
（1）中心汇票
付款行是在货币清算中心城市的汇票是中心汇票。如使用英镑，以伦敦一家银行为付款行，即英镑中心汇票；使用美元，以纽约一家银行为付款行的汇票，即美元中心汇票。
中心汇票的出票人是汇出行，付款人是其在货币清算中心城市的代理行，汇出行在那里开设了中心帐户，收款人是汇款的收款人，可以和付款行是异地。

24. （2）中心汇票汇款的特点
汇出行不拨头寸，票面没有拨头寸指示。当中心汇票提交付款行时，它借记出票行的中心帐户予以付款，并将借记报单寄给出票行完成一笔票汇汇款。

25. （3）中心汇票
汇款人
收款人
（1）交款付费
（2）付给中心汇票
托收行
（4）提示中
心汇票
（5）付款
汇出行
出票行
付款行
中心帐户行

26. 3.2.4 Comparison among T/T, M/T, and D/D
Items
T/T
M/T
D/D
Methods of transfer
Telex, cable,SWIFT
Airmail
Mail or carried by remitter
Time of transfer
fastest
slow
security
Quite safe
Reliable, but may be lost/delayed in post
Stop-payment is time consuming
Notification from bank to beneficiary
yes no
endorsement
negotiable
Method of authentication
Test key or SWIFT key
Authorized signature
charge
high
low
lowest

27. Reimbursement method
Crediting vostro account of the paying bank.
If the paying bank maintains a current account with the remitting bank, a vostro account from the perspective of the remitting bank. The reimbursement instruction should be: “in cover, we have credited the sum to your account with us.”

28. The reimbursement instruction should
be: “in cover, we have credited the sum to your account with us.”
Remitting bank
Paying bank
Payment order: in cover, we
have credited your a/c with
us.

29. (2)debiting remitting bank’s nostro account.
If the remitting bank maintains a current account with the paying bank, the reimbursement instruction should be:
“in cover, please debit the sum to our account with you.”
“in cover, you are authorized to debit the sum to our account with you.”

30. “in cover, please debit the sum to our account with you.”
“in cover, you are authorized to debit the sum to our account with you.”
Remitting bank
Payment order: in cover, please debit our
a/c with you.
Paying bank
Your account debited

31. (3) Instructing a third bank to debit the remitting bank’s account and credit the paying bank’s account
If there is no vostro or nostro account between the remitting bank and the paying bank, the remitting bank can find a third bank, say Bank A, with which both the paying bank and the remitting bank maintain current accounts. The reimbursement instruction should be:
“in cover, we have authorized Bank A to debit our account and credit your account with the above sum. ”

32. “in cover, we have authorized Bank A to debit our account and credit your account with the above sum. ”
（1）in cover: we have authorized x bank to
debit our a/c and credit your a/c with them
Paying bank
Remitting bank
（2）cable
（3）credit advice
Accounting bank
（4）debit advice，

33. (4) Instruct a third bank to debit the remitting bank’s account with it and remit the cover to the paying bank.
If the remitting bank maintains a current account with another bank, and the paying bank maintain a current account with a different bank, then the reimbursement instruction will be:
“In cover, we have instructed X Bank to pay the proceeds to your account with Y Bank.”

34. （1）in cover: we have authorized x bank to
remit proceeds to you
Remitting bank
Paying bank
（2）拍发电传，请
X行借记汇出行帐户，
将头寸汇给汇入行。
Accounting bank
（3）拍发电传，将头寸
汇交汇入行

35. 3.2.6 cancellation of the remittance
1. Cancellation of M/T or T/T
At the request of the remitter, before payment is made, M/T or T/T can be cancelled. Whenever the paying bank receives an advice from the remitting bank to cancel the latter’s payment order, it will do accordingly.
once the payment has been made, the remittance cannot be cancelled. The remitter himself may contact the payee to claim back the remittance payment.

36. 2. Cancellation of a bank draft already issued
Before the remitter sending the draft to the beneficiary, the remitter can ask the remitting bank to cancel the remittance.
But once the remitter send the draft to the beneficiary, the remitting bank will not agree to cancel the remittance.

37. 3.3 application of remittance in international trade
Based on the timing of effecting payment and the time of delivering the goods, remittance can be divided into two types:
payment in advance
open account.

38. 3.3.1 Payment in advance
It signifies that the importer pays the exporter before delivery of the goods.
Payment in advance is most advantageous to the exporter.
But it is expensive and risky to the importer, his capital will be tied up prior to receipt of the goods, and he has no assurance that the exporter will supply goods as contracted,

39. that the quality and quantity of the goods will meet the terms of the sales contract, and that he will receive the goods in time.
Therefore, the importer should consider whether the exporter is reliable and whether there is a stable political or economic environment in the exporter’s country.
In certain cases the importer requires the exporter to provide a written undertaking or letter of guarantee that the goods will be delivered as contracted.

40. 3.3.2 open account
Open account is an arrangement between an importer and an exporter, by which the goods are manufactured and delivered before payment is required.
Open account can be divided into goods sold and sold on consignment

41. 3. It is beneficial to the importer.
4. But it is disadvantageous to the exporter. since the exporter release the title to the goods without having assurance of payment, his capital is tied up. Before using this method, the exporter must have absolute confidence that he will be paid at the agreed date.

42. 5. The major risks
(1) buyer risk
It covers the danger that the buyer may not pay for the goods because of insolvency or willful default.
The exporter can obtain a status report on the buyer. A favorable status report does not guarantee that the import will pay his debts, but it does serve as a useful indication of his creditworthiness and integrity.
(2) Country risk
The importer’s government may introduce laws, often called exchange controls, which prevent payment from being made.

43. The exporter should be aware of the current exchange control regulations in the importer’s country, and always assesses whether any additional restrictions are likely.
(3) Transit risk
Goods is danger of loss or damage on their journey from seller to buyer.
To take insurance. And take out seller’s interest insurance to cover himself against damage to goods if the importers has failed to insure under terms such as CFR.

44. Between an importer and an exporter who are creditworthy and reliable trade partners, and between head office and branches, remittance is definitely an efficient, safe, timely, and cost effective method of settlement.

45. Chapter 4 Collection 4.1 Introduction to collection
4.2 documentary collection practice
4.3 risk protection and financing under collection methods

46. 4.1 Introduction to collection
4.1.1 what is a collection?
Collection is an arrangement whereby the goods are shipped and a relevant bill of exchange is drawn by the seller on the buyer, and / or shipping documents are forwarded to the seller’s bank with clear instructions for collection through one of its correspondent bank located in the domicile of the buyer.

47. 进口商 出口商 资金 付款人/进口商 承运人 代收行 托收行 代收行
D/P
进口商
出口商 资金
付款人/进口商
委托人/出口商
买卖合同
7.提单
1. 货物
承运人
8.货物
2.单据，汇票和申请书
6.交单
5. 付款
4.付款提示
10. 付款
江铜集团出口阴极铜至美国自由港公司
代收行
托收行
托收行
代收行
3.单据，汇票和托收指示书
9. 付款

48. 4.1.2 parties to a collection
The principal (seller/exporter/drawer)
It is the customer of a bank who prepares documentation and submits them to his bank with a collection order for payment from the buyer.

49. 2. The remitting bank (seller’s bank)
It is the bank receiving documentation from the seller for forwarding to the buyer’s bank along with instruction for payment.
3. The collecting bank (buyer’s bank)
It is the bank presents the documents to the buyer and collects cash payment or a promise to pay in the future from the buyer in exchange for the documents.
Normally the collecting bank is a correspondent or branch of the remitting bank in the importer’s country.

50. 4. Presenting bank
It is the bank that present the documentation to the drawee. In practice, the presenting bank and the collecting bank are usually the same. When the drawee does not maintain an account with the collecting bank, the collecting bank can invite a local bank which the drawee has an account to make presentation, thus acts as a
presenting bank

51. 5. The drawee (buyer/importer)
6. Principal’s representative in case of need
The person located in the same city of the drawee and is appointed by the principal. Its duty is to look after the goods in the event of non-acceptance and /or non-payment.

52. Relationship between the parties
principal
drawee
Sales contract
Collection application
Agency agreement
Remitting bank
Collecting bank
Collection instruction

53. 4.1.3 Types of collection
1. In terms of documents related
(1) documentary collection
Documentary collection is a collection on financial instruments being accompanied by commercial documents or collection on commercial documents without being accompanied by financial documents. .

54. Financial documents are bills of exchange, promissory notes, checks, or other similar instruments used for obtaining the payment of money.
Commercial documents refer to invoices, transport documents, documents of title or other similar documents, or any other documents whatever, not being financial documents
Under documentary collection, the exporter retain ownership of the goods until they receive payment or are reasonably certain they will receive it.

55. (2) Clean collection
Clean collection is a collection on financial documents without commercial documents such as invoices, bill of lading, insurance policy, etc.
A clean collection may represent a trade transaction, the exporter has sent commercial documents directly to the importer or the exporter’s foreign agent.
It may represent a purely financial transaction involving no movement of merchandise and, therefore, no commercial documents.

56. 2. In terms of release of documents
Documents against payment (D/P)
The collecting bank release the documents only against payment by the drawee.
D/P at sight: the draft is a sight draft

57. D/P after sight: the draft is a time draft
D/P after sight: the draft is a time draft. the collecting bank first presents the documents to the drawee for acceptance, but does not release the documents to the drawee upon acceptance. When the draft matures, the collecting bank presents it to the drawee for payment, and only against payment, the collecting bank will release the documents to the drawee.

58. D/P at sight drawee 1.present for payment 3.deliver the documents
2.make payment
Collecting bank

59. D/P after sight drawee 1present for acceptance 3 present for payment
2 make acceptance
4 make payment
5 deliver documents
Collecting bank

60. (2) Documents against acceptance (D/A)
The collecting bank may release the documents to the drawee against acceptance by the drawee.
Advantage to the importer:
After acceptance, the importer gains possession of the goods before payment and is able to dispose of the goods as he wishes.

61. Disadvantage to the exporter:
The exporter bears the risk of the importer’s non-payment. Before accepting D/A, the exporter should be sure the importer will make payment at maturity, because the exporter will lose control of the goods and rely on the creditworthiness and integrity of the importer to pay on due date.

62. D/A drawee 1 present for acceptance 2 make acceptance
3 deliver documents
4present for payment
5 make payment
Collecting bank

63. 4.2 跟单托收实务 4.2.1 付款交单的程序 Sales contract 买卖合同 principal Drawee
1. Goods 货物
4.付款提示
5. 付款
2. documents,
Drafts, and
Application
单据，汇票和申请书
6.交单
8. Payment 付款
3.单据，汇票和托收指示书
Collecting bank
Remitting bank
7. 付款

64. D/P flowchart Sales contract 买卖合同 principal Drawee 1. Goods 货物 5. 付款
4.付款提示
5. 付款
2. documents,
Drafts, and
Application
单据，汇票和申请书
6.交单
8. Payment 付款
Collecting bank
Remitting bank
3.单据，汇票和托收指示书
7. 付款

65. Procedure for D/A Sales contract principal Drawee 1. goods
4.present for acceptance
5. make acceptance
7.present for payment
6.deliver documents
2. documents,
Drafts, and
application
8.payment
10. payment
3. documents, drafts,
Collection instruction
Remitting bank
Collecting bank
9. payment

66. 进口商 出口商 资金 付款人/进口商 承运人 代收行 托收行 代收行
D/P
进口商
出口商 资金
付款人/进口商
委托人/出口商
买卖合同
7.提单
1. 货物
承运人
8.货物
2.单据，汇票和申请书
6.交单
5. 付款
4.付款提示
10. 付款
江铜集团出口阴极铜至美国自由港公司
代收行
托收行
托收行
代收行
3.单据，汇票和托收指示书
9. 付款

67. D/A 资金 付款人/进口商 买卖合同 1. 货物 承运人 9.付款提示 6.交单 12. 付款 3.单据，汇票和托收指示书 代收行
出口商 资金
付款人/进口商
委托人/出口商
买卖合同
7.提单
1. 货物
承运人
8.货物
5.承兑
10.付款
2.单据，汇票和申请书
9.付款提示
4.承兑提示
6.交单
12. 付款
江铜集团出口阴极铜至美国自由港公司
托收行
代收行
托收行
代收行
3.单据，汇票和托收指示书
11. 付款

68. Procedure for D/A （承兑交单的程序）
销售合同
principal
Drawee
1. 合同
5. 承兑
7.付款提示
2. 单据，汇票
托收申请书
4.承兑提示
8.付款
6.交单
10. 付款
3. 单据，汇票
和托收指示书
Remitting bank
Collecting bank
9. 付款

69. Procedure for D/A （承兑交单的程序）
Drawee
principal
1.销售合同
5. 承兑
6.交单
2. 单据，汇票
托收申请书
7.付款提示
4.承兑提示
8.付款
10. 付款
Remitting
bank
3. 单据，汇票
和托收指示书
collecting
bank
9. 付款

70. Draft under collection
The drawer:
the principal
The drawee:
the importer
The payee:
the exporter; the remitting bank;
the collecting bank.

71. To Sunlight Garment Company New York For Tianjin Textiles Import
Exchange for USD Tianjin, 1 Jan.2013
D/P at sight pay to ourselves the sum of US dollars one hundred thousand.
Drawn against shipment of 22 bales of pongee from Tianjin to New York for collection.
To Sunlight Garment Company
New York
For Tianjin Textiles Import
and Export Corp., Tianjin
signed

72. For collection
pay to the order of A bank
for Tianjin textiles import and export co.
signed
2. For collection
pay to the order of B bank
for A bank

73. Exchange for USD100000 Tianjin,1 Jan.2013
D/P at sight pay to the order of A bank the sum of US dollars one hundred thousand.
Drawn against shipment of 22 bales of pongee from Tianjin to New York for collection.
To Sunlight Garment Company
New York
For Tianjin Textiles Import
and Export Corp., Tianjin
signed

74. Exchange for USD100000 Tianjin,1 Jan.2013
D/P at sight pay to the order of B bank the sum of US dollars one hundred thousand.
Drawn against shipment of 22 bales of pongee from Tianjin to New York for collection.
To Sunlight Garment Company
New York
For Tianjin Textiles Import
and Export Corp., Tianjin
signed

75. 4.2.2 collection instruction
A collection instruction includes the following items:
Details of the principal.
Details of the drawee.
Name and address of principal’s representative in case of need.
Amount and currency to be collected.
A list of documents and the number of each document.

76. 6. Bank and other charges.
The remitting bank will debit its own commissions and expenses and those of the collecting bank to the exporter even if it is not so stated to in the instruction. The exporter can give instructions that the commissions and expenses be born by
the buyer. If the buyer refuses to pay them, the collecting bank may still release the documents to him, unless the collection instruction expressly states that the documents may not be released until the payment of commissions and expenses.

77. 8. Method of remittance.
9. About protest.
10. Advice of dishonor
11. 必要时的代理
In case of need refer to Smith Jone Co., 99 Rue des Achetuer, Paris whose authority is limited to assisting in having the draft hononured

78. 4.2.3 bank’s liabilities and disclaimers under a collection
Banks have no obligation to handle a collection;
Banks are only permitted to act upon the instructions given;
Disclaimer for acts of an instructed party;

79. 4. Disclaimer on effectiveness of documents;
5. Disclaimer on delays, loss in transit and translation;
6. Banks do not deal with the goods, services or other acts.

80. D/P flowchart key bank 江西省 进出口公司 农行 江西省分行 Sales contract 买卖合同 Dwyer
instruments
1. Goods 货物
4.付款提示
5. 付款
2. documents,
Drafts, and
Application
单据，汇票和申请书
6.交单
8. Payment 付款
key bank 农行
江西省分行
3.单据，汇票和托收指示书
7. 付款

81. 4.3 Risk Protection and Financing Under Collection Method
4.3.1 Risk involved
1. Risk for exporter
(1) Non-acceptance of merchandise
The importer may refuse to accept the merchandise.
The exporter is stuck with his merchandise in a foreign port, incurring a heavy storage charge and a market at a greatly reduced price.
通常，需要时的代理会处理货物.

82. (2) Non-payment under D/A
The importer fails to pay the accepted time bill at maturity .
(3) Possession of goods
The importer, due to local regulation, can get possession of the goods without paying or acceptance.
(4) Exchange restriction
The local exchange regulations do not permit the importer to obtain the necessary foreign exchange.

83. 2. Exporter’s measures against risks
(1)The exporter should make sure the importer is of good reputation and of good financial standing.
(2) The exporter should take into account the economic and political conditions in the importing country.
(3) The exporter should pay attention to the foreign exchange regulations in the importer’s country.

84. (4) To conclude a deal under CIF, that is the seller itself arranges insurance.

85. 3. Risk for importer
The risk that the goods shipped may not be as ordered.
The importer should pay attention to the exporter’s reputation and the ability to deliver merchandise of the grade, quality and quantity as ordered.

86. 4.3.2 Financing under the collection
1.Bill purchased (negotiation)
(1) Definition
The remitting bank purchases the documentary draft drawn by the exporter on the importer from the exporter.
幻灯片 64

87. (2) Process
When the exporter hands the documentary drafts to the remitting bank for collection, the remitting bank purchase it.
The bank then sends the exporter the net amount after deducting the bank fees and interest incurred;

88. The remitting bank sends the documentary draft to the collecting bank for presentation to the importer;
When the collection is paid, the collection bank remits it to the remitting bank.
(3) Comment
In case of non-payment by the drawee, the remitting bank has a right of recourse to the exporter. But if the exporter is insolvent, the remitting bank will assume the risk. So, many remitting bank are unwilling to do so.

89. 2. Advance against collections
On the request of the exporter, the remitting bank may make a loan to it against the drafts and documents.
The amount of the loan is a proportion of the collection amount. The guarantee of providing the loan is the proceeds that the exporter will collect through selling goods to the buyer.

90. 3. Trust receipt (T/R)
Definition
Under D/P after sight, when the goods and documents have both arrived at the importer’s place ,but the draft is not mature, the importer is eager to obtain the goods, then the importer may make a written undertaking in the form of trust receipt to the collecting bank to borrow the documents and get goods from the shipping company.
幻灯片 61

91. (2) The obligations of the drawee under T/R
The drawee is a trustee, the collecting bank acts as the entruster.
The drawee should arrange for the goods to be warehoused and insured in the name of the collecting bank;
To pay all the proceeds of sale to the collecting bank or to hold them on behalf of the collecting bank;

92. Not to put the goods in pledge to other person;
To return the goods or proceeds to the bank at any time when requested;

93. (3) Risks for the collecting bank
If the importer is not creditworthy, there is a risk of the importer’s non-payment;
So the bank usually requires cash deposits or a guarantor
(复印资料p6)

94. 4. Release of goods against guarantee Definition
When the goods have arrived but the documents are still on the way. The collecting bank can issue a letter of guarantee, by which the collecting bank undertakes to deliver the B/L to the shipping company when it arrives, otherwise, the bank will pay to the shipping company.

95. D/P flowchart Sales contract 买卖合同 Drawee principal 1. Goods 货物 5. 付款
4.付款提示
5. 付款
2. documents,
Drafts, and
Application
单据，汇票和申请书
6.交单
8. Payment 付款
Remitting bank
Collecting bank
3.单据，汇票和托收指示书
7. 付款

96. importer
carrier
1.L/G application
2.L/G
Collecting bank

97. The shipping company releases the goods to the importer against the L/G without receiving the B/L.
(2) Risk
The bank takes the risk of the importer’s non-payment and have to submit the B/L to the shipping company.

98. Chapter 5 Letter of Credit
5.1 Introduction to L/C
5.2 Procedures of a documentary L/C
5.3 Types of L/C
5.4 Financing provided by banks under L/C
5.5 Risk Protection

99. 5.1 Introduction to L/C 5.1.1 What is a L/C?
A letter of credit is a letter written by a bank to the beneficiary, informing the beneficiary that the bank will pay a sum certain in money to the beneficiary if the beneficiary provides the bank with certain described documents within a prescribed time period.

100. 1. 销售合同 2. 开证申请 受益人/出口商 申请人/进口商 信用证 （Letter of Credit） 开证行/进口地银行
海尔集团出售100台超低温保存箱至美国VWR公司。
开证行/进口地银行

101. The letter of credit is an effective way to solving conflict between buyer and seller. Its objective is to facilitate international payment by means of the creditworthiness of the bank.
It offers security to both buyer and seller.
The seller has security to get paid provided he presents impeccable documents.
The buyer has the security to get the goods required through the documents he stipulated in the credit.

102. 出口商 进口商 1. 销售合同 12.提单 5. 货物 13. 货物 6. 提单 4.通知信用证 10.单据 11. 付款 2. 开证申请
受益人/出口商
申请人/进口商
12.提单
5. 货物
承运人
13. 货物
6. 提单
4.通知信用证
10.单据
11. 付款
2. 开证申请
7.单据
海尔集团出售100台超低温保存箱至美国VWR公司。
通知行
3. 开出信用证
开证行
通知行/寄单行
开证行/进口地银行
8. 单据
9. 付款

103. 5.1.2 Characteristics of a L/C
1. A written undertaking on the part of the issuing bank
A banker’s credit is more acceptable
than a trader’s credit.
2. Independent of the sales contract
3. Exclusively dealing with documents

104. 案例 1. 销售合同 北京宣联公司 5. 货物 6. 提单 2. 开证申请 4.通知信用证 7.单据 起 诉 3. 开立信用证 9. 单据
韩国Dlfame公司
5. 货物
6. 提单
2. 开证申请
4.通知信用证
7.单据
起 诉
3. 开立信用证
9. 单据
10. 拒付通知
11. 退单

105. 1. 销售合同 韩国新湖商社 2. 开证申请 4.通知信用证 7.单据（伪造） 通知行 开证行 3. 开立信用证 9. 单据 进口商 出口商
峨眉山进出口公司
5. 货物
（经调查，
实际未发货）
2. 开证申请
4.通知信用证
7.单据（伪造）
哈尔滨经济技术开 意大利康瑟里
亚阿地奇公司
发区对外经贸公司
通知行
开证行
3. 开立信用证
韩国农协国际银行
9. 单据

106. 5.1.3 The parties to a L/C Applicant
The buyer, he fills out a Credit application and request the bank to issue a Credit in favor of the exporter.
Timely apply for Credit issuance
Hand over Margin for Credit issuance
Timely apply for Credit amendment
Right on documents review
Timely effect payment

107. 2. The Issuing Bank
The bank who issue the L/C on request of the applicant. It is in a core position.
Requirement on margin for Credit issuance
Rejection on payment for discrepant documents
Be exempted from its obligation for delay or loss of transmission
Deals exclusively with documents
It’s undertaking to pay is final

108. 3. The beneficiary / the exporter
Requirement on amendment of the Credit.
Ship goods as required by Credit timely.
Complete all the documents and make presentation on time.
Demand the proceeds by presenting drafts and documents complying with the Credit.

109. Sales contract
applicant
beneficiary
L/C application
L/C
Issuing bank

110. 4. The advising bank
It is the bank which advise the Credit to the beneficiary.
The advising bank check the authenticity of the Credit.
If the authenticity of the Credit can not be verified, the advising bank may also decide not to advise the Credit, but it must inform the issuing bank about it in time.
If the advising bank still decide to advise such a L/C, it must inform the ben. that the L/C’s authenticity has not been established.

111. 5. The confirming bank
(1)A confirming bank is authorized by the issuing bank to add its confirmation to the Credit.
(2) when an issuing bank is in low reputation or when there exists political risk or economical risk in the issuing bank’s country, the beneficiary will request a confirming bank.
(3) Confirmation is a definite promise to the beneficiary.

112. 6. The negotiating bank
A bank authorized by the issuing bank to negotiate by giving value for drafts and/or documents.
(1)The issuing bank and the confirming bank shall be
responsible to the negotiating bank for reimbursement.
(2) The negotiating bank will only have to examine the
documents with reasonable care to ascertain whether there is discrepant documents
(3) If the issuing bank dishonor the draft, the negotiating bank has the right of recourse to the beneficiary.

113. 7. The paying bank
A bank who is authorized by the issuing bank to pay the beneficiary according to the terms and conditions of the Credit.
8. The accepting bank
The bank accepting the draft under a Credit authorized by the issuing bank.

114. 9. The reimbursing bank
(1)The issuing bank shall provide the reimbursement bank with the authorization to honor reimbursement claim;
(2) The issuing bank shall not require the claiming bank to provide the reimbursing bank with a certificate in compliance with the terms and conditions of the Credit.
(3) The reimbursing bank shall not examine the documents.
(4) The reimbursing bank’s charge should be for the account of the issuing bank.

115. BOC Shanghai BOC New York 3.支付索偿金额 1.索偿书 2.偿付授权书 1. 单据
Japan Indus. bank
1. 单据
BOC Shanghai

116. 10. Claiming bank
It may be the negotiating bank, the paying bank, the accepting bank.

117. 5.2 Procedures of a Documentary L/C
1. A buyer and a seller enter into a sales.
2. The buyer instructs the issuing bank to issue a documentary credit in favor of the seller.
3. The issuing bank opens a documentary Credit.
4. The issuing bank asks the advising bank to advise and perhaps also to add its confirmation to the documentary L/C.
5. The seller examines the documentary credit. If the terms and conditions of the L/C do not comply with the sales contract, the seller request an amendment to the L/C.

118. 4. Amendment notification 幻灯片 120 1.Sales contract Applicant
beneficiary
1.Sales contract
Applicant
4. Amendment
notification
2. Order of amendment
3. Amendment
notification
Advising bank
Issuing bank

119. 6. The seller ships the goods and prepares for the required documents.
7. The seller presents his documents to the nominated bank for settlement.
8. The nominated bank forwards documents to the issuing bank, claiming reimbursement as agreed between the two banks.
9. The issuing bank examines the documents and make reimbursement.
10. The buyer redeems the documents and picks up the goods against the documents.

120. 受益人 申请人 1. 销售合同 12.提单 5. 货物 13. 货物 6. 提单 4.通知信用证 BP 10.单据 2. 开证申请
受益人/出口商
申请人/进口商
12.提单
5. 货物
承运人
13. 货物
6. 提单
4.通知信用证 BP
10.单据
2. 开证申请
11. 付款
7.单据
海尔集团出售100台超低温保存箱至美国VWR公司。
通知行
议付行
3. 开出信用证
开证行
通知行
开证行/进口地银行
8. 单据
9. 付款

121. L/C: B/L made out to order and blanked endorsed notified the applicant.
1. For The Haier Co.
signed
2. For Bank of China
3. For Citi Bank

122. L/C: B/L made out to the order of issuing bank and special endorsed.
Deliver to the order of VWR Co.
for Citi Bank
signed

123. 1. Sale contract
beneficiary
5. goods
12. B/L
applicant
Shipping
company
6. B/L
7.documentary draft
13. goods
10. documentary draft
4.advice L/C
11. payment
8. payment
2. L/C application
3. L/C
BOC青岛分行
加拿大皇家银行
9. documentary draft
10. payment

124. 1. Sale contract
B Co.
香港商人
5. goods
12. B/L
Shipping
company
6. B/L
7.documentary draft
13. goods
10. documentary draft
4.advice L/C
11. payment
8. payment
2. L/C application
3. L/C
Negotiating bank
Issuing
bank
9. documentary draft
10. payment

125. 4. Amendment notification 幻灯片 120 1.Sales contract Applicant
beneficiary
1.Sales contract
Applicant
4. Amendment
notification
2. Order of amendment
3. Amendment
notification
Advising bank
Issuing bank

126. L/C: B/L made out to order and blanked endorsed notified the applicant.
1. For The skyworth Co.
signed
2. For China Construction Bank
3. For Citi Bank

127. L/C: B/L made out to the order of issuing bank and special endorsed.
Deliver to the order of Sony Co.
for Citi Bank
signed

128. L/C: insurance policy specially endorsed to the order of our bank.
1. Claim payable to the order of Sony Co.
For Citi Bank
signed

129. 5.4 Types of L/C 5.4.1 according to whether it can be revoked or not
Revocable credit
A credit that may be amended or cancelled or revoked by the issuing bank without the beneficiary’s consent and even without prior notice to the beneficiary up the moment of payment.
It does not constitute an undertaking by the issuing bank to make payment.

130. 2. Irrevocable L/C
A credit that cannot be cancelled or modified without the express consent of the issuing bank, the confirming bank and the beneficiary. It is an undertaking by the issuing bank to make payment.
Function clause:
“we hereby issue in your favor this irrevocable documentary credit that is available by payment of you draft.”

131. 5.4.2 According to the adding of confirmation
Confirmed L/C
A credit that carries the commitment to pay by both the issuing bank and the confirming bank.
The issuing bank’s authorization clause:
“The advising bank is authorized to add your confirmation.”

132. The confirming bank’s engagement clause:
“At the request of the correspondent bank, we confirm the Credit and also engage with you that drafts drawn in conformity with the terms of this credit will be paid by us.”

133. 2. Unconfirmed credit
A credit that bears no confirmation of the correspondent bank.
Function clause:
“We advise this credit to you without engagement on our part.”

134. 5.4.3 According to the tenor
Sight Credit
Time Credit
Usance L/C payable at sight
Anticipatory Credit

135. 5.4.3 According to the tenor
Sight credit
A credit calling for payment upon the presentation of the documents either with or without a sight draft.
Function clause:
“Payment is to be made upon presentation of the complying documents at the counter of ……bank.”

136. 2. Time credit / Usance credit
(Seller’s usance L/C)
Under time credit, the issuing bank engages that if the time draft comply with the terms of the credit, it will be duly accepted on presentation and duly honored at maturity.
Function clause:
“Payment of the draft drawn under this credit will be effected at……days after sight.”

137. 3.Usance L/C payable at sight
(Buyer’s usance L/C )
Under the L/C, a time draft involved, but the beneficiary will receive payment at sight and the discount charges and acceptance commission are for account of the applicant. The applicant will make payment when the draft matures.

138. Function clause:
1. available for acceptance of your draft at 90 days sight drawn on us, drawee bank’s discount or interest charges and acceptance commission are for applicant’s account, and therefore the ben. is to receive face amount of the draft as if drawn at sight.

139. 2. Usance drafts drawn under the credit are to be negotiated at sight basis. Interest is for buyer’s account.
3. The negotiating bank is authorized to negotiate the usance draft at sight for the face amount.

140. 4. Anticipatory credit (red-clause L/C)
At the request of the applicant, the issuing bank inserts a special clause in the credit, authorizing the negotiating bank to make advances to the beneficiary against the issuing bank’s guarantee.

141. 预支信用证处理基本程序图

142. Function clause:
“The negotiating bank is hereby authorized to make advance to the beneficiary up to an aggregate amount of USD 200,000 (20% of the amount of the credit). The advance, with the interest are to be deducted from the proceeds of the drafts drawn under this credit.”

143. 1. Sale contract
beneficiary
5. goods
12. B/L
applicant
Shipping
company
6. B/L
7.documentary draft
13. goods
10. documentary draft
4.advice L/C
11. payment
8. payment
2. L/C application
3. L/C
Advising bank
Negotiating bank
Issuing
bank
9. documentary draft
10. payment

144. 5.4.4 According to the mode of availability
Sight payment credit
Acceptance credit
Deferred payment credit
Negotiation credit

145. 5.4.4 According to the mode of availability
1. Sight payment credit
A sight payment credit provides payment to the beneficiary immediately after presentation of the stipulated documents.

146. the Credit is to expire on or before (date) at _(1)_(place) and is available with _(2)_(issuing bank or nominated bank) by payment at sight (3)against the ben.’s Draft (4)at sight drawn on _(5)___(nominated paying bank)
Straight payment Credit

147. Undertaking clause:
we hereby engage that payment will be duly made against (sight draft and documents) / (documents) presented in conformity with the terms of this credit.

148. 2. Acceptance credit
Under an acceptance credit, the nominated bank is authorized to accept the time draft drawn under the credit.
It give the importer time to make payment. If he can resell the goods before payment falls due, he can use the proceeds to meet the bill of exchange.

149. the Credit is to expire on or before (date) at _(1)_(place) and is available with _(2)_(issuing bank or nominated bank) by acceptance of draft of the ben.’s Draft (4)at 30 days sight drawn on _(5)___(nominated accepting bank)

150. After acceptance, the bill can be discounted in order to obtain the credit amount immediately.
Function clause:
“This credit is available by acceptance of your draft drawn on ……bank”

151. 3. Deferred payment credit
A deferred payment credit is available by deferred payment with the nominated bank at a fixed time after the date of the bill of lading or after the presentation of documents. No draft is required for this credit.

152. the Credit is to expire on or before (date) at _(1)_(place) and is available with _(2)_(issuing bank or nominated bank) by deferred payment at___(3)_ against the documents herein

153. To the exporter, a deferred payment credit is not as good as an acceptance credit.
Undertaking clause:
we hereby engage that payment will be made at 180 days after presentation of documents (180 days after the date of shipment) against the documents presented comply with the terms and conditions of this Credit

154. In 1999, Banco Santander v Banque Paribas
Beneficiary Applicant
Banco Santander Banque Paribas

155. 4. Negotiation credit
A negotiation credit permits the beneficiary to negotiate the drafts and documents with a bank restricted by the issuing bank or any other bank.
Restricted negotiation credit.
Freely negotiation Credit
restrict negotiation Credit

156. the Credit is to expire on or before (date) at _(1)_(place) and is available with _(2)_(nominated bank) by negotiation against the ben.’s Draft (4)at __sight drawn on _(5)___(issuing bank) and the documents detailed herein

157. Undertaking clause
we hereby agree with the drawers, endorsers, and bona fide holders of drafts/documents drawn under and in compliance with the terms and conditions of the Credit that such drafts / documents will be duly honored on due presentation if negotiated on presented at this office on or before the expiry date.

158. 5.4.5 According to whether the credit can be transferred or not
Transferable credit
A transferable credit is a credit under which the first beneficiary may request the nominated transferring bank to make the credit available in whole or in part to one or more second beneficiaries.

159. Function clause: “this credit is transferable.”
A transferable credit can be transferred once. .

160. First Ben. Secondary Ben. Transferring bank Issuing bank
1.转让申请书
2.新证
4.单据
3.单据
5.换单后交单
Transferring
bank
7.付款
6.单据
Issuing
bank

161. 2. Non-transferable credit
A credit under which the beneficiary may not request the credit be transferable.

162. 5.4.6 According to special function clause
1. Back-to-back credit
In a trade with a middleman, and the credit issued in favor of the middleman is not transferable, the beneficiary of the credit (primary credit) may use the credit as security to open a separate credit (back-to-back credit or secondary credit) in favor of the real supplier.

163. It involving two separate credits, the primary credit is opened by the buyer in favor of the middleman, the secondary credit is opened for the account of the actual supplier. The beneficiary of the primary credit is the applicant of the secondary credit.

164. 母证开证行
进口地银行
橡胶进口商
（德国）
buyer
middleman
母证受益人
子证申请人
英国中间商
1 开证
母证通知行
母证议付行
2 通知
10 索汇
9 换单后交单
3申请开证
8付款
4 开证
5 通知
子证受益人
橡胶供货商
（马来西亚）
supplier
子证通知行
子证议付行
子证开证行
英国开证行
6 交单
得到议付
7 索汇

165. 2. Revolving credit
A revolving credit is one by which the amount of the credit is renewed or reinstated without specific amendments to the credit.
Revolving credit in relation to time.
Revolving credit in relation to value.
It can be cumulative or non-cumulative.

166. A cumulative revolving credit:
“This credit is revolving at USD20,000 covering shipment of goods per month cumulative operation from May 2013 to Sep inclusive up to a total amount of USD 100,000”.
A non-cumulative revolving credit:
“This credit is revolving for amount up to a maximum of USD200,000 per month non-cumulative from May to Sep ”
A revolving credit related to amount:
“This Credit is revolving for three shipments only. Each shipment should be effect at one month interval. The amount of each shipment is not exceeding $ The total value of this revolving Credit does not exceed $ ”.

167. Automatic revolving
The amount paid under this Credit shall be again available to you automatically until the total of the payment reaches $
Non-automatic revolving
The amount shall be renewed after each negotiation only upon receipt of Issuing Bank’s notice stating that the Credit might be renewed.
Semi-automatic revolving
Should the Negotiating Bank not be advised of stopping renewal within a week, the unused balance of this Credit shall be increased to the original at the beginning of the next week after each negotiation.

168. 3.Reciprocal credit
A reciprocal credit is usually concerned with a barter transaction. It is in all respects similar to an ordinary credit except that the applicant of the original credit is the beneficiary of the reciprocal credit, while the beneficiary of the original credit is the applicant of the reciprocal credit.

169. time L/C Ben. applicant sight L/C applicant Ben. China material
importer
U.S material
exporter
U.S product
importer
China product
exporter

170. 5.5 Financing provided by banks under a letter of credit
5.5.1 Packing loan
1.Upon receipt of a credit and when the exporter is short of money to purchase or manufacture the goods , the exporter may use the credit as a collateral to apply for a loan, and the funds will be only used for preparing the goods .
2. risk

171. 5.5.2 Anticipatory credit
1. Sale contract
beneficiary
5. goods
12. B/L
applicant
Shipping
company
6. B/L
7.documentary draft
13. goods
10. documentary draft
4.advice L/C
11. payment
8. payment
2. L/C application
3. L/C
Advising bank
Negotiating bank
Issuing
bank
9. documentary draft
10. payment

172. comparison between packing loan and anticipatory L/C
Similarities
A. Both provide financing for exporter before shipment;
B. Both require exporter to present documents to the bank provides financing, and refund will be deducted from the negotiated amount.

173. (2)differences
Packing loan
Anticipatory L/C
A kind of working capital loan
A kind of documentary L/C
The exporter is liable to refund at the fixed date
The importer is liable to refund to the exporter’s bank
Currency for the packing loan is exporter’s domestic currency
Currency for advance payment is one of the L/C

174. 5.5.3 Export bill purchased (BP)
The exporter’s bank purchases the documentary draft upon the request of an exporter if there is no discrepant documents.
Before purchases bill, the bank should consider:
Credit of issuing bank;
Conformity of documents with L/C;
“Soft clauses” of credit;
Credit of applicant and beneficiary.

175. 5.5.4 Bill discount
Bill discount is an act of bill, and a kind of financing. The bill must be a time bill.
The discount bank must examine the credit of the applicant and the accepter.
Q: Under which kind of L/C can the exporter be financed in this way?
A: acceptanct L/C

176. 5.5.5 Approval of credit line by the issuing bank
Normally, the applicant pay margin to the issuing bank.
对于资信良好的长期客户，为简化手续，增强竞争力，银行通常根据客户的资信、经营状况和业务数量，确定一个限额，即开证限额。只要进口商申请开证的金额不低于这一限额，银行免收保证金，减轻进口商的资金压力。

177. 5.5.6 Trust Receipt (T/R)

178. 1. Sale contract
beneficiary
5. goods
12. B/L
applicant
Shipping
company
6. B/L
7.documentary draft
13. goods
10. documentary draft
4.advice L/C
11. payment
8. payment
2. L/C application
3. L/C
A bank
Negotiating bank
Issuing
bank
9. documentary draft
10. payment

179. 5.5.7 Shipping guarantee
By issuing the shipping guarantee, the bank will bear the risk of non-payment and losing the goods title, and stand the loss claim from the shipping company.

180. importer
carrier
1.L/G application
2.L/G
issuing bank

181. Before issuing a shipping guarantee, the bank must require the importer to fulfill his obligations as follows:
Transfer the fund as per the invoice into an escrow account of the issuing bank.

182. (2) Redeem the guarantee from the shipping company by original B/L
(3) Be fully responsible for any loss of the shipping guarantee issued by the bank.
(4) Waive the right of rejecting the documents even if there are discrepancies. (case)

183. 幻灯片 117.
1. Sale contract
beneficiary
5. goods
12. B/L
applicant
Shipping
company
6. B/L
7.documentary draft
13. goods
10. documentary draft
4.advice L/C
11. payment
8. payment
2. L/C application
3. L/C
A bank
Negotiating bank
Issuing
bank
9. documentary draft
10. payment

184. 5.6 Risk Protection 5.6.1 For banks
Bank should deal with L/C according to 《UPC 500》and the correspondent agreement between banks, and with reasonable care and cautiousness.
5.6.2 For the importer and exporter
Both the importer and exporter should fulfill their obligation according to the international practice and the sales contract. p122

185. p13
1. Sale contract
beneficiary
5. goods
12. B/L
applicant
Shipping
company
6. B/L
7.documentary draft
13. goods
10. documentary draft
4.advice L/C
11. payment
8. payment
2. L/C application
3. L/C
BOC青岛分行
加拿大皇家银行
9. documentary draft
10. payment

186. P16-17
1. Sale contract
B Co.
香港商人
5. goods
12. B/L
Shipping
company
6. B/L
7.documentary draft
13. goods
10. documentary draft
4.advice L/C
11. payment
8. payment
2. L/C application
3. L/C
Negotiating bank
Issuing
bank
9. documentary draft
10. payment

187. P39
We are holding documents at your disposal.（我们保留单据，听候指示。）
自开证行付出拒付电之日起，开证行就没有了处置单据的权利，就算这时进口商改变了主意，同意付款接受单据，开证行也要先征求交单行的意见，再根据交单行的指示办事。

188. Chapter 6 documents 6.1 General introduction
6.2 Drafts drawn under a L/C
6.3 Commercial invoice
6.4 Bill of Lading
6.5 Insurance documents
6.6 other documents

189. 6.1 General introduction 6.1.1 types of documents 1. Basic documents
2. Additional documents

190. 6.1.2 roles of documents
Representing the title to the ownership of the goods;
Evidencing the fulfillment of obligation.

191. 6.2 drafts drawn under a L/C
6.2.1 examination of drafts drawn under a L/C
Date and place of issue
The date of issue should not be later than the expiry date of the L/C, and not earlier than that of relevant transport documents.
The place of issue is usually the place of beneficiary.

192. 2. Tenor
The tenor of the draft must meet the terms of the L/C
3. Payee
The payee should be the beneficiary or the beneficiary’s bank.
4. Amount
The words “about”, “approximately” used before amount of the credit, then 10% more or 10% less is allowed in the draft.

193. 3. Drawn clause
A drawn clause includes the name of the issuing bank, the L/C no. and the issuing date.幻灯片 150
4. Drawee
The drawee is the issuing bank or another bank nominated by the issuing bank.
5. Drawer
The drawer is the beneficiary, namely the exporter.
6. Copies

194. Drawn under the L/C No. 1234 issued by the ABC bank dated on 1 Jan

195. 6.3 Commercial Invoice 6.3.1 What is a commercial invoice?
The commercial invoice is the key accounting document describing the commercial transaction between the buyer and the seller, giving details of goods, service, price, quantity, settlement terms and shipment.

196. 6.3.2 Contents of commercial invoices
(p.119)
6.3.3 The role of commercial invoices
The evidence of the exporter’s fulfillment of obligation.
The core document
Used for bookkeeping
Used for customs clearance
Replacing the drafts in case no drafts are required.

197. Case
我方A公司凭sight payment L/C 出口马达一批，并根据信用证的要求及时将货物装运出口。但在制作单据时，商业发票上的商品名称按信用证的规定缮制为“Machinery and mill works, Motors”,而B/L上商品的名称仅填该商品的统称“Motors”.
问题：付款行可否以此为由拒付货款？为什么？

198. UCP600第18条c款：商业发票上的货物、服务或履约行为的描述应该与信用证中规定一致。
UCP600第18条e款：商业发票外，其他单据中的货物、服务或履约行为的描述，可使用与信用证中的描述不矛盾的概括性用语。

199. 6.4 Bills of lading 6.4.1 What is a B/L?
A B/L is a certificate of the title to the goods issued by a carrier or its agent, evidencing that the goods have been shipped on board and will be transported to the destination.

200. 6.4.2 The functions of a B/L
A receipt for the goods from the shipping company to the exporter.
The evidence of the contract of carriage between the exporter and the carrier.
A document of title for goods.

201. 6.4.3 the parties to a B/L
Carrier
The party issues the B/L, and is responsible for transporting the goods.
2. shipper /consignor
The party who consigns the goods to the carrier.
3. Consignee
The party who has the right to pick up the goods at the port of destination.

202. 4.notify party
The party who the carrier will notify of the arrival of the goods.

203. 6.4.4 The endorsement of a B/L幻灯片 111
6.4.5 The face of a B/L and its signature
6.4.6 Main contents of a B/L (p.123)

204. Signed by the carrier:
1. China Ocean Shipping Group Co.
Carrier
signed
2. China Ocean Shipping Group Co.

205. Signed by the agent (ABC Co.):
as agent for
China Ocean Shipping Co.
(Carrier)
signed
2. ABC Co.
as agent for the above named Carrier

206. 6.4.7 Types of B/Ls
Shipped on board B/L & received for shipmen B/L
(1) A shipped on board B/L means that the goods have been shipped on board the vessel in apparent good order and condition;
shipped on board
14 Dec. 2015
Ocean Vessel name
Koeln Express

207. (2)A received for shipment B/L bears no notation “On Board” , and means that the goods have been received by the carrier and ready for shipment.

208. 2. Clean B/L & Unclean B/L
A clean B/L is one that bears no clause or notation declaring a defective condition of the goods and/or the packing.
An unclean B/L has notations declaring a defective condition of the goods and / or the packing.

209. The notation such as:
“Contents leaking”, “packaging soiled by contents”, “goods damaged/scratched”,
“packaging broken/holed/torn/damaged”,
“goods /torn/deformed”,
“insufficient packaging ”, “packaging dented”,
“contents exposed”, “X cases short shipped”.

210. 3. Direct B/L, transshipment B/L and through B/L
4. Long form B/L & short form B/L
5. Liner B/L & charter party B/L
6.预借提单
7.倒签提单

211. 3．依照下附海运提单，回答问题。
提单 BILL OF LADING
DIRECT OR WITH TRANSHIPMENT
Shipper: ABC Co. Ltd Consignee: To ORDER
Notify address: XYZ Co. Ltd. Tel. No
Vessel: M. V. Gloria Port of Loading: Shanghai
Port of discharge: YoKohama
Particulars furnished by the Shipper
Container seal No. or M&NDescription of goods Gross weight (kgs)Measurement (m3)1234CN/56JPCosu8oo2 soc3os3bu Freight and charges: Freight Prepaid.
Number of original B/Ls: TWO
Signed for or on behalf of the Master:
DEF Co., Ltd. AS AGENT FOR GHI Co., Ltd. AS CARRIER

212. 问题：（1）该提单应由谁首先背书？
（2）谁是承运人？
（3）正本提单有几份？
（4）装运港和卸货港分别是哪里？
（5）XYZ Co. Ltd是否一定是收货人？
（6）该提单由谁签署？

213. 6.4.8 other transport documents
Multimodal transport document
Airway bill
An airway bill is issued by an air carrier or its agent, evidencing that the carrier or its agent has received the goods and will transport them to the destination.
It does not act as the title of the goods, and is not negotiable.

214. 3. Railway bill
4. Road or inland waterway transport documents
5. Courier receipt (快邮收据)
6. Post receipt

215. 6.5 Insurance documents 6.5.1 What is an insurance document?
An insurance document is issued by the insurer to the insured, whereby the insurer (insurance company or undertaking) undertakes to indemnify the assured against certain losses.

216. 6.5.2 Types of insurance documents
Insurance policy
It is a document issued by an insurance company, covering the goods being shipped against specified risks during the whole journey between the seller and the buyer.
2. Insurance certificate
It is the same as an insurance policy except that the version of the provisions of the policy is abbreviated.

217. 3. Open cover (预约保单)
An open cover is an arrangement between the insurer and the insured, where the coverage, liabilities and premium are set out with a lump sum, and the maximum sum for each shipment is limited. An insurance certificate is issued after the declaration by the insured of each shipment.
6.5.3 The contents of an insurance policy
(p.125)

218. The insured:
L/C: insurance policy issued to the order of ABC bank and blank endorsed.
Insurance policy issued in the favor of ABC Co. and special endorsed.幻灯片 1114

219. 6.6 other documents 6.6.1 certificate of origin (p.128)
A certificate of origin is issued by an authority or the exporter stating the country of origin of goods.
A certificate of origin Form A, specifically, is a document required by the customs authorities of many developed nations to prove eligibility of imported merchandise under duty-free import programs such as the General System of Preferences (GSP).

220. 6.6.2 Inspection certificate (p.129)
It is a document issued by an authority indicating that goods have been inspected prior to shipment and the result of the inspection.
6.6.3 packing list / weight list
A packing list contains the details of the goods provided by the exporter.
A weight list describes the weight of each piece of goods, issued by the exporter.

221. 6.6.3 Cable copy
If a letter of credit stipulates that the exporter should cable the details of the shipment immediately after the goods are shipped. The exporter must do, present a cable copy.
6.6.4 Beneficiary’s statement
A beneficiary’s statement declares that the beneficiary has fulfilled the obligations of the sales contract issued by the beneficiary.

222. 6.6.5 Shipping company’s certificate
It is issued by the shipping company, certifying the conditions of the carrying vessel, such as the name, nationality and age of the vessel.

223. Chapter 7 letter of guarantee (L/G)
海航邮轮海娜号
大新华轮船公司 融资租赁合同 沙钢船务公司
L/G
海航集团

224. Chapter 7 letter of guarantee (L/G)
7.1 Introduction
7.2 Types of L/Gs

225. 7.1 Introduction 7.1.1 What is a letter of guarantee?
A bank guarantee is a written promise issued by a bank at the request of its customer, undertaking to make payment to the beneficiary within the limits of a stated sum of money in the event of default by the principal.

226. 7.1.2 Parties and obligations
1. Principal
2. Guarantor
3. Beneficiary
4. Advising bank
It is a bank in the beneficiary’s place that notifies the guarantee to the beneficiary.

227. beneficiary
Principal
Underlying contract
Letter of guarantee
L/G application
Advising bank
guarantor

228. 7.1.2 Contents of a L/G
Parties involved;
Guarantee purpose;
The underlying transaction;
Amount of guarantee;
Payment mechanism or terms for demanding payment;
The expiry date or expiry event of the guarantee;
Other provisions.

229. 7.1.3 Procedures of a L/G operation
The underlying contract is concluded between the principal and the beneficiary;
The applicant applies for the opening of an L/G;
The guarantor issues an L/G;
4. The beneficiary claims for payment from the guarantor;
5. The guarantor bank claims for reimbursement from the applicant;
6. The L/G is cancelled after the payment.

230. beneficiary principal Advising bank guarantor
1.Underlying contract
principal
5.Make payment
4.Written demand for payment
6.Claim for reimbursement
2.apply for a L/G
3. L/G
3. L/G
Advising bank
5. Make payment
guarantor 4.

231. 7.1.4 Types of L/G In terms of methods of issuing the the guarantee
(1)direct guarantee
The guarantor issues a L/G directly to the beneficiary.
Underlying contract
principal
beneficiary
application
Letter of guarantee
guarantor

232. applicant Ben. guarantor
直接（三方）保函
applicant
Underlying contract
Application
Ben.
L/G
guarantor

233. (2) Indirect L/G
A foreign bank located in the beneficiary country will be request by the initiating bank to issue a L/G in return for the latter’s counter guarantee.
beneficiary
principal
Underlying contract
application
Letter of guarantee
Counter guarantee
Instructing bank
guarantor

234. 间接（四方）保函
基础合约
受益人
申请人
2.开立保函申请 保函
3. 反担保函
担保人
指示行

235. 受益人 申请人 担保人 指示行 1.基础合约 5.索偿书及相关单据 2.申请开立反担保函 9.索偿 6.付款 4.保函 10.付款
3.反担保函
担保人
7. 索偿
指示行
8.付款

236. beneficiary principal Instructing bank guarantor
1.Underlying
contract
beneficiary
principal
5.Written demand
for payment
8.Make reimbursement
2.Apply for a
counter L/G
6. Make payment
4. L/G
3. a counter L/G
Instructing
bank
guarantor
7.Make
reimbursement

237. 2. In terms of the purposes of guarantees
Guarantees under international trade: tender L/G, performance L/G, advance payment L/G, payment L/G, deferred payment L/G, guarantee for compensation trade, etc.
Guarantees under international construction: bid bond, performance guarantee, maintenance guarantee, customs guarantee, and overdraft guarantee.

238. 7.2 types of guarantees Bid bond / tender guarantee
(1) Bid bond is an undertaking given by a bank at the request of a tender in favor of a party inviting tenders abroad, whereby the guarantor undertakes to make payment to the beneficiary within the limit of a stated sum of money in the event of default by the principal in the obligation resulting from the submission of tender.
(2) Sample

239. 2. Performance bond
A performance bond is an undertaking given by a bank at the request of a supplier of goods or services to a buyer or a contractor to an employer, whereby the guarantor undertakes to make payment to the beneficiary within the limit of a stated sum of money in the event of default by the supplier or the contractor in due performance of the terms of a contract between the principal and the beneficiary.
Sample

240. 3. Advance payment bond
An advance payment bond is issued at the request of the exporter to the importer when the advance payment is required by the latter, the guarantee ensures the repayment of the advance by the exporter in the event of the non-performance of his contractual obligations.
Sample

241. 4. Overdraft guarantee
Under the overdraft guarantee, the guarantor undertakes to refund the bank providing the overdraft facility, should the applicant fail to repay in due time the amount overdrawn in the account.
Sample

242. 5. Import guarantee
It is issued at the request of the importer to guarantee his effecting payment in accordance with the terms of the relative contract. O/A
6. Loan guarantee
7. Leasing guarantee
lessor （出租人） lessee （承租人）
8. Maintenance guarantee

243. L/C and L/G
Both are issued by a bank on the request of a principal.
Under both L/C and L/G, banks provide credit.

244. Difference:
1. L/C is only used in international trade;
L/G can be used in any kind of international economic transaction.
2. For each transaction under L/C, the issuing bank should pay to the ben. if the documents comply with the credit;
For transaction under L/G, only when the principal fails to fulfill his obligation under the underlying contract, should the bank pay to the beneficiary.

245. 7.3 Standby L/C What is a standby L/C?
A standby L/C represents an undertaking by a bank to pay a third party (the beneficiary) upon the failure of the bank’s customer (the applicant) to perform specified obligations.
2. Characteristics of a standby L/C
Clean L/C
The bene is only required to present a written statement that the applicant has defauled in his obligation. No commercial documents are required.

246. (2) Financial obligation & non-financial obligation
A standby L/C can be used to protect the bene against losses due to the applicant’s failure to meet financial obligations and non-financial obligations.
(3) Payment procedures
A standby L/C is payable on simple demand by the bene. This leaves the applicant at risk.

247. 3. Types of standby L/Cs
(1) Performance standby
It supports an obligation to perform other than to pay money owed, the issuing bank promised to pay losses arising from a default of the applicant in completion of the underlying transaction. (specimen)
(2) Advance payment standby
It is issued by the issuing bank to the bene. Undertaking to pay to the bene provided that the applicant default under the underlyig contract and he failed to return the fund advanced paid by the bene.

248. (3) Tender bond standby
(4) Counter standby
In some country, a standby issued by foregn bank is prohibited. If the applicant and the bene locate in different countries, the applicant will ask his bank to instruct a bene.’s bank to issue a standby in favor of the bene., normally, the applicant’s bank will issue a counter standby in favor of the bene’s bank to request the bene’s bank to issue a standby in favor of the bene.

249. beneficiary
applicant
1.Apply for a counter standby
3. A standby L/C
2. A counter
Standby
Bene.’s bank
Applicant’s bank

250. (5) Financial standby
It is to support the applicant’s obligations to pay money to the bene.
The applicant is a borrower in international loan. (specimen)

251. (6) Commercial standby
It is issued by the issuing bank to the bene., undertaking to pay the bene a specified sum of money provided the applicant fails to pay for the goods or services supplied by the bene.
It is used in international trade.

252. Commercial standby
The seller delivers commercial documents directly to the buyer.
2.The documents required to presented by the bene. are simple.
3.The buyer delivers goods first, then makes payment.
4.Apply to ISP98 and UCP500
Documentary L/C
The seller delivers commercial documents to bank.
2.The documents required to presented by the bene. are complex.
3. The buyer makes payment first, then delivers goods.
4. Apply to UCP500

253. Chapter 6 Factoring and forfeiting

254. 6.1 Factoring 6.1.1 Origin and evolution of factoring
6.1.2 What is factoring?
A factoring contract means a contract pursuant to which a supplier may or will assign accounts receivable to a factor for ledgering receivables, collecting proceeds and / or protecting against bad debts.

255. 6.1.3 Parties to a factoring
1. The supplier / seller
2. The debtor / buyer
3. The export factor
4. The import factor

256. 6.1.4 Procedures
The importer and the exporter negotiate and propose to use factoring as the payment technique;
The exporter and its factor sign a factoring agreement, entrusting the export factor to investigate the importer’s creditworthiness and to approve a credit line;
The export factor notifies its correspondent factor to investigate the buyer’s creditworthiness;

257. 4.The import factor investigates the buyer’s credit and approves a line of credit;
5. The import factor will notify the export factor of the information on the creditworthiness of the buyer and the line approved;
6. The export factor notifies the exporter of the result of the investigation and the line of credit approved;

258. 7. They signs the sales contract, and the invoice value should be limited within the approved credit line, and then delivers goods;
8. The exporter submits the invoice copy to the export factor for finance and the advance is about 85% of the invoice value;
9. The import factor duns the buyer to make payment periodically;

259. 10. The buyer makes payments due to the import factor;
11. The import factor remits the proceeds to the export factor;
12. The export factor pays the exporter for the rest 15% of the invoice value.

260. 1
exporter 7
importer 11 2 8 4 10 6 13 3
Export factor 5
Import factor 9 12

261. 6.1.5 Services provided to the exporter by a factor.
Credit investigation
The factor usually investigates the creditworthiness of each of the exporter’s customers.
According to the result of the investigation, the import factor approves a certain sum of credit line.

262. 2. Collection of proceeds
3. Management of accounts receivable

263. 4. Risk protection
Within the approved credit line, the exporter is safe. When the buyer fails to pay due to financial inability or when a late payment exists, the factor will pay the exporter.
5. Financing
The factor may grant financing to the client prior to the maturity by purchasing the latter’s accounts receivables.

264. 6.1.6 Types of factoring
1. Maturity factoring and financed factoring
A maturity factoring means the seller cannot obtain the proceeds upon selling its accounts receivable to the factor, until the buyer make payment.
A financed factoring is a typical factoring, it means the seller can immediately obtain the proceeds minus the interest and charges upon selling its accounts receivable.

265. 2. Single factoring and co-factoring
Single factoring involves only one factor, the import factor, the exporters bank functioned only as an intermedium to transfer funds and documents;
International factoring involves two factors, one at home and the other abroad, and is called co-factoring.

266. 6.2 Forfeiting 6.2.1 The evolution of forfeiting 出口商 进口商 包买商 担保人 1. 货物
2. 本票
4. 资金
6.索偿
3. 本票
包买商
5.索偿
担保人

267. 6.2.2 What is forfeiting?
Forfeiting is the business of discounting medium-term and long-term promissory note or drafts without recourse related to an international trade transaction. The promissory notes or drafts is accepted by the importer and guaranteed by an importer’s bank ensuring the holder that the importer will pay it at maturity.

268. 6.2.3 Parties
1. Forfeiter
2. Exporter
3. Importer
4. Guarantor

269. exporter
importer
forfeiter

270. 6.2.4 characteristics
The goods are usually capital goods;
It is a medium-term and long-term business;
The purchase of drafts and promissory notes is without recourse to any previous holder;

271. 4. Forfeiting usually requires a L/G or an aval from a prime bank in the buyer’s country to provide guarantee for the instrument.

272. 6.2.5 documentation of forfeiting
Evidence of debt
promissory notes or bills of exchange issued for each installment of the supplier’s credit.
2. Evidence of the commercial transaction

273. 3. Guarantee document
A legal document independent of the underlying sales contract. The value of the guarantee must be devisable. It can be a letter of guarantee, an aval or a standby letter of credit.

274. 6.2.6 procedure
The exporter request for forfeiting quotation from a forfeiter;
The forfeiter provides a forfeiting proposal;
The forfeiter and the exporter conclude a forfeiting agreement, by which the forfeiter provides a firm offer to the exporter;

275. 4. The exporter presents required documents to the forfeiter for delivery;
5. The forfeiter examines the documents and makes payment to the exporter;
6. The forfeiter claims payment from the buyer when the instruments matures

276. 18
forfaiter
guarantor 11 12 17 16 2 1 4 5 6 3
importer
exporter 7 8 10 13 15 13 9
Remitting bank
Collecting bank 14

277. 1.询价 / request for quotation from a forfaiter
2 不承担责任的报价供提高售价参考 / provide a forfaiting proposal
3 提价后与其达成10次分期付款贸易合同 / conclue a sales contract
4 负责任的报出贴现价格 / provide the firm offer to the exporter
5 接受报价达成包买交易 / accept the firm offer and conclue a forfaiting agreement

278. 6 发出承担书 / the forfaiter sends a commitment letter to the exporter
7 发运货物 / deliver goods
8 全套单据 / a set of documents
9 寄送单据 / mail the documnets
10 通知凭本票交单据 / invoice the buyer to exchange promissory notes for the documents

279. 11 签发本票要求担保 / makes notes and asks for guarantee
12 已担保本票 the guaranteed promissory notes
13 单据 / 已担保的本票 documents and promissory notes
14 寄送已担保的本票 / sends the guaranteed notes
15 已担保的本票 / sends the guaranteed notes

280. 16 作成无追索权背书后提示要求贴现 / endorses without recourse and presents for discount
17 净款 / pay the discount cash to the exporter
18 到期日的本票提示要求付款 / when matures, present for payment

281. 6.2.7 costs of forfaiting finance
Option fee
Commitment fee
Discount interest
Days of grace fee

282. 6.2.8 Forfaiting vs. factoring
The goods under forfaiting are usually capital goods;
Medium-terms or long-terms from 6 months to 10 years;
The risks for a forfeiter include political, transfer and commercial risks.
Factoring:
The goods under factoring are mainly consumer goods;
Short-terms less than 6 months;
The risks for a factor are only commercial risk.

283. 6.2.9 forfeiting vs. invoice discounting
Forfaiting:
The forfeiter has no recourse to its prior;
Capital goods and involves a series of debt instrument;
The debt instrument should be guaranteed by a prime bank in the country of the importer;
The fees charged by a forfeiter are higher.
Invoice discounting:
The discounting house has recourse to its prior;
Ordinary goods and there is usually one debt instrument for a single deal;
No guarantee is required;
The fees charged by the discounting house is lower.

284. 3．依照下附海运提单，回答问题。
提单 BILL OF LADING
DIRECT OR WITH TRANSHIPMENT
Shipper: ABC Co. Ltd Consignee: To ORDER
Notify address: XYZ Co. Ltd. Tel. No
Vessel: M. V. Gloria Port of Loading: Shanghai
Port of discharge: YoKohama
Particulars furnished by the Shipper
Container seal No. or M&NDescription of goods Gross weight (kgs)Measurement (m3)1234CN/56JPCosu8oo2 soc3os3bu Freight and charges: Freight Prepaid.
Number of original B/Ls: TWO
Signed for or on behalf of the Master:
DEF Co., Ltd. AS AGENT FOR GHI Co., Ltd. AS CARRIER

285. 问题：（1）该提单应由谁首先背书？
（2）谁是承运人？
（3）收货人提货时应交出几份提单？
（4）装运港和卸货港分别是哪里？
（5）XYZ Co. Ltd是否一定是收货人？
（6）该提单由谁签署？

286. D/P flowchart Sales contract 买卖合同 principal Drawee 1. Goods 货物 5. 付款
4.付款提示
5. 付款
2. documents,
Drafts, and
Application
单据，汇票和申请书
6.交单
8. Payment 付款
Collecting bank
Remitting bank
3.单据，汇票和托收指示书
7. 付款