i. instruments
a. a brief introduction
1. what s instruments? ① a broad sense: a commercial document of title;
② a narrow sense: a specific, negotiable security for the purpose of paying money signed by the drawer on it which is unconditionally agreed to pay a sum in certain by the himself or by another. e.g. if agreed to pay by the maker, it is promissory note; if agreed to pay by another, it may be a draft or a cheque.
2. the role of instruments
(1) function of settlement; (2) function of credit guarantee;
(3) negotiability (4)function of paying off debts
3. kinds of instruments: financial (cheque, notes, drafts) / commercial instruments (b/l, invoice, certificate of origin, packing list, etc.)
b. main notes used in international settlement p1——8
1. cheque p1—4
(1) definition: an unconditional order in writing drawn on a bank by the drawer, requiring the bank to pay a sum certain in money to or to the order of a named person or to the bearer.
(2) clearing cheques (procedure of clearing a cheque shown as follows)
drawer drawing a cheque to the payee → payee
∣ ∣
∣ ∣
cheque ac mandate presenting the cheque
↓ ↓
paying bank ← credit advice collecting bank
payment to collecting bank →
a. the collecting bank
its responsibility of scrutinizing a cheque
i. date: ① out of date ② post-dated ③ undated
ii. payee
iii. words & figures
iv. signature
v. crossings
vi. endorsements:
① how to endorse a cheque
② kinds of endorsements
(i) blank endorsements
(ii) specific endorsements
(iii) restrictive endorsements
b. the paying bank
its obligations:
i. legal obligations to honor dishonor a cheque
ii. identifying the paying bank & time limits for dishonoring cheques
ii. scrutinizin g the cheque & the ac mandate
c. the payee
d. crossings
kinds of crossings: ① general; ② special(add name of a bank)
2. draft p5—6
(1) definition: an unconditional order in writing prepared or drawn by one person(drawer) and addressed to another(drawee), requiring or directing the drawee to pay a specific sum of money to or to the order of a third person (the payee), to the bearer, on demand or at a fixed or determinable future time. (refer to ① p15:bill of exchange; ② p121:def with a specimen)
(2) kinds
a. whether accompanying docs or not : clean/documentary drafts p5
b. maturity: sight (demand) drafts/tenor(time, usance) drafts p5
c. source: commercial/bank drafts p6
(3) with or without recourse p5
(4) bank drafts —— a cheque drawn by one bank on another
(5) endorsements of a draft (refer to p2—3 that of a cheque)
3. promissory note p7
(1) definition: an unconditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or determinable future time, a sum certain in money, to or to the order of a specified person or to the bearer.
(2) differences between a promissory note and a draft or a cheque
4. traveler s cheque p7
non-trade settlement item; difference between traveler‘s cheque & l/c
?●?credit cards p7—8
(1) non-trade settlement item;
(2) kinds: ① credit card/debit card; ② banking card/non-banking card ;
(3) five biggest cos in the world: ① visa international ② master card international; ③ american express company; ④ jcb credit card company ⑤ diners club international.
ii. remittance
1. a brief introduction:
(1) a means of settlement
(2) kinds: ① instruments of remitting m/t; t/t; d/d; ② inward / outward
2. mail transfer & telegraphic transfer p8—9
(1)book-keeping for transfers of funds
uk customer: outward remittance in gbp—— how to record ?
c ustomer ac vostro ac
dr. gbp xxxx │ │cr. gbp xxxx
uk customer: outward remittance in forcurrency—— how to record?
c ustomer ac nostro ac
dr. gbp xxxx │ │cr. forcurrency xxxx
iii. means of payment p9——15
1. cash in advance p9——10
2. open account p10
3. collection p10——12
4. documentary credit p12——15
iv. collection p15——30
1. outward documentary collection p15——25
2. inward documentary collection p25——30
v. documentary letter of credit p30——58
(i). concepts of the documentary credit p30——35
1. an overview p30
2. stages of a documentary credit p30——31
3. review of the documentary credit application & security agreement by the issuing bank p31——33
4. utilization of the documentary credit p33
5. common sense rules for the beneficiary p33——34
6. honoring the obligation under the documentary credit p34——35
(ii). types & uses of the documentary credits p35——58
1. types p35——36
(1) irrevocable documentary credit p35
(2) revocable documentary credit p35——36
2. uses p36——58
(1) irrevocable straight documentary credit p36 (specimen refer to p37)
(2)irrevocable negotiation documentary credit p36——39
(3) irrevocable documentary credit (unconfirmed) p39
(specimen refer to p40-41)
(4) irrevocable confirmed documentary credit p39——42
(specimen refer to p43-44)
(5) revolving documentary credit p42——45
(6) red clause documentary credit p45
(7) standby credits p45——46
(8) transferable documentary credit p47——54
(9) assignment of proceeds p55——56
(10)back-to-back documentary credit p57——58
vi. bonds, stand-by letter of credit & counter-trade p58——72
(i) bonds p58——62 (spec imen refer to p66-72)
1. the role of bonds in international trade p58
2. types of bond p58——59
3. "on demand" bonds & conditional bonds p59——60
4. the procedure for issuing bonds p60
5. the procedure which bonds cause for exporters p60——61
6. how can an exporter overcome or reduce the problems of bonds ? p61——62
7. other precautions an exporter can take requiring to provide bonds p62
(ii) counter-trade p63——65
1. what is counter-trade? p63
2. forms of counter-trade p63
(1) counter-purchase(link purchase) p63
(2) barter p63
(3) compensation or buyback deals p63
(4) barter by means of trust accounts p63——64
(5) offset p64
(6) evidence accounts p64
3. pitfalls of counter-trade for the exporter p64
4. sources of help for the counter-trade exporter p65
(1) banks p65
(2) ecgd p65
(3) the projects & export policy division of the dti p65
vii. commercial documents p73——84
1.transport documents used in international settlement p73——77
2. documents other than transport documents p77——84
viii. incoterms p85——88
ix. payment systems p88——90
1.an overview p88
2.swift p88
3.chaps p88——89
4.chips p89
5.fed wire transfer p90
x. forms p91——140
1.irrevocable documentary credit application & its explanation (p91——119)
2.credit form(advice for the beneficiary) p110
3. credit form(advice for the advising bank) p111
4. credit form(advice for the advising bank) p112
5. credit amendment form & its explanation (p118——120)
6. draft(bill of exchange) (definition & a specimen p121)
7. commercial invoice ucp 500 article 37 (definition & a specimen p122)
8. specimen of a certificate of origin p124
9. specimen of an insurance document p125
10. specimen of an inspection certificate p127
11. specimen of a marine/ocean/port-to-port bill of lading p129
12. specimen of a non-negotiable sea waybill p130
13. specimen of a chart party bill of lading p132
14. specimen of a multimodal transport document p133
15. specimen of an air transport document p 134
16. specimen of a road transport document p136
17. specimen of a rail transport document p137
18. specimen of a courier service document p138
19. specimen of a transport document issued by freight forwarder p139
20. specimen of a transport document issued by freight forwarder p140