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3. Answer the questions.

1. What methods of cash payment can you name?

2. Why is payment by cheque very frequent foreign trade?

3. Is payment by transfer used in foreign trade?

4. What types of letter of credit are used in commercial practice?

5. When are payment for collection terms used?

6. What are the methods of payment on credit?

7. What is a draft?

8. What are the types of drafts?

9. In what cases is advanced payment used?

10. When is payment on an open account practical?

11. What are the most frequently used terms of delivery?

12. Who bears responsibility for the goods in transit on CIF and FOB terms?

13. What are other terms of delivery that can be used in trade? Describe them.

15. Which counterpart does the choice of the terms of delivery remain with?

4. What is wrong in the following statements?

1. A telephone or telex transfer or post(mail) remittance is a fast method of payment made from the Buyers’ bank account to the Sellers’ one with the Buyers’ letter of instruction.

2. An irrevocable Letter of Credit can be either modified or cancelled without the consent of the Party in whose favour it has been opened.

3. L/C is the most frequently used method of payment as it is advantageous both to the Exporter and the Importer and less expensive as compared with a post remittance.

4. Payment for collection is the most disadvantageous to the Exporter as he cannot require the guarantee of payment from the Importer.

5. Drafts require the Debtors to pay to the Creditors a certain sum of money on the fixed day of payment only.

6. The difference between sights drafts and term drafts is their validity but not the conditions under which they become payable.

7. Payment in advance stipulates a 50% advanced payment to the Sellers.

5. Match the terms of delivery with the definition.

1. CIF 2. FOB 3. FAS 4. CAF 5. FOR 6. EXW

a) the delivery of the goods from the factory at the Buyers” expense with the risk of damage to or loss of the goods.

b) the delivery up to and placement of the goods on the railway train at the Sellers” expense

c) the delivery including the value of the goods, transportation and other expenses until the goods are on board the vessel

d) the delivery which includes the cost of the goods and transportation to a stipulated destination at the Sellers’ expense

e) the delivery including the cost of the goods, their insurance and freight at the Sellers’ expense

f) the delivery up to and the placement of the goods alongside ship but without loading.

6. What do the following abbreviations stand for?

L/C, B/E, CAF, CIF, FOB, EXW, FOR, FOT, FAS, FOC

7. Fill in either sellers or buyers.

1. Post remittance is made from the ….. bank account to the …… account in accordance with the ……. letter of instruction.

2. Payment for collection is not preferred by the ….. as there is no guarantee that he will receive payment in time.

3. While effecting the payment with the Bill of Exchange the ….. credits the …. /. It is drawn by the ….. on the …. And is sent through the bank to the …. for acceptance.

4. An open account is granted by the …… to the …… in whom the …… has a complete confidence.

5. Ex ship with the port of destination indicated means that the ….. pay for all the charges up to and including the placing o the goods at the disposal of the …. on board the ship at the port of destination.