Vocabulary notes

headaches – головные боли

prompt – быстрый

provided – при условии

strictly in accordance – в строгом соответствии

to imply – иметь в виду

to cancel - отменять

to amend - исправлять

to appreciate – оценивать

beneficiary – владелец фонда, собственник

reputable bank – надёжный банк

involved – заинтересованный

forgone conclusion – заранее принятое решение

irrespective - независимо

instances - случаи

to preclude – предотвращать

discrepancies – разногласия

regrettably – к сожалению

Comprehension and Discussion Questions

1. How can you explain the notion “a documentary credit”?

2. What is the role of banks in the trading process?

3. What is the difference between a revocable and irrevocably credits?

4. What is the procedure of promoting contract terms?

5. Is it important to deal with a reputable bank?

6. What does “irrevocably confirmed credit” mean?

Text IV. Contract of sale

Prior to a documentary credit being established, the buyer and seller enter into a Contract of Sale which includes:

1. The price basis - reflecting terms of delivery, CIF, FOB, and so on.

2. A period of time to allow for shipment by the seller and a latest date of shipment.

3. A description of the goods.

4. The method of payment agreed, ie by Documentary Credit payable in sterling at sight in London.

5. The method of despatch of the goods.

6. The documents required by the buyer.

7. The name of an arbitrator (in case of need) in the event of a dispute.

8. The name of the seller's bank through which the credit is to be advised/confirmed.

9. Details of who is to be responsible for paying bank charges, both at home and abroad.

If all these points are considered at the outset and the Contract of Sale is agreed between the parties, then a workable credit acceptable to the seller should result. It is as well to incorporate a date by which the credit is to be received, as this will enable you to alter prices, and so on, should the credit not be opened in a reasonable time.

When the credit is received, study the terms and conditions carefully and show it to your forwarding agent to ensure he can arrange the necessary shipping space. If you are unhappy with any aspect of the credit, seek clarification from the advising bank. If you know you are unable to comply with any requirement, request an immediate amendment from the buyer. You are now ready to ship the goods and present your documents to the advising bank for payment.

There are a number of documents basic to most credits and there may be additional ones relative to the goods you are exporting, or the country for which your goods are destined. The most important documents are listed below:

1. Documents evidencing movement of the goods. Depending on the mode of transport agreed, these may take the form of Bills of Lading, Air Waybills, Railway Consignment notes, Parcel Post Receipts, and so on. In other words, evidence that the goods have been released to a carrier for onward movement overseas.

2. Invoices. Commercial invoices will be required in the number of copies specified, giving a full description of the goods, the price, the terms of shipment, freight and insurance costs where payable, details of import licences and shipping marks as they appear on the movement document. A certified invoice or Certificate of Origin may be called for on which it will be necessary to certify the country of origin of the goods. The credit may call for this certification to be given by an approved Chamber of Commerce. Consular Invoices are required by some countries which usually take the form of specially printed documents available from the appropriate consulate, which have to be legalised. Delays can be encountered in obtaining legalised invoices, so early action is recommended when these are needed. Some consulates charge quite high fees for this service, another factor to be taken into account when setting your selling price.

3. Insurance certificates. It is essential that all goods for export are covered by insurance at every stage of the journey. Who is to pay for this insurance will have been agreed in the Contract of Sale.

Where insurance is arranged by the exporter, the credit will call for evidence to this effect, usually in the form of a Certificate of Insurance. It is also likely that the credit will call for a value at least 10 per cent over the invoice value. The risks covered should be exactly those stipulated, the certificate should not be dated after shipment, and if claims are payable at a specific place, then this too must be incorporated. These documents should also show the relative shipping marks for identification purposes.

4. Other documents. Depending on the type of goods being exported, the credit may also call for packing lists, weight notes, Certificates of Chemical Analysis, Health Certificates and the like, all of which are self-explanatory. Some foreign governments require all imports to be covered by a Clean Report of Findings given by an independent inspection agency. These agencies are established worldwide and will carry out a check on your own premises, prior to shipment, examining quality and quantity and making a price comparison. Make an early request for a visit, as there can be delays. This requirement is most common when exporting to African States.