Role plays.

1.Discuss all pros and cons of different methods of payment used in foreign trade with your partner.

2.You have been trading with a rather reliable partner for some time. Now he is facing certain financial difficulties. Decide with your colleagues if you are going to change the method of payment or not.

Problem-solving:

The production process used in your factory is known, by your scientists, to produce pollution. At the moment it is not scientifically possible to test and prove this and so there is no legal obligation to change your process. There is an alternative process but it would make your product more expensive and therefore less competitive. What should you do?

Answer the questions on the topic:

1. Characterize all the methods of payment you know.

2. Explain when and why each one is used.

3. What problems can occur when you use them?

Unit 6

Insurance

Part 1

DIALOGUE 1

Paula Williams runs the Export Sales Department of Mercury Com­puters Ltd. Her assistant, Bob Seagrum, has just joined the firm. Paula talks to Bob about insuring a consignment of goods for South America.

PAULA Here's an interesting letter, Bob. It's from a customer in Colombia, Mr Carrera. Do you remember him?

BOB Yes. What does he say?

PAULA Let me put you in the picture, first. A few weeks ago Mr. Carrera bought some of our microcomputers. Now he's written to say he'll be placing regular orders with us.

BOB That's good. We don't sell much to South America at the moment, do we? It'll give us a foothold in the market.

PAULA Yes. I hope it'll be the start of something quite big. Carrera doesn't just do business in Colombia. He's got sales outlets in Venezuela and Ecuador as well.

BOB Just the kind of contact we need, then.

PAULA Definitely. The orders will be fairly large — about three to five thousand pounds (£3—£5,000) worth a month. Carrera wants us to arrange insurance cover for the shipments.

BOB So the invoices will be made out CIF, won't they?

PAULA Yes, CIF Caracas. Mr Carrera will airfreight the goods from there to Bogota, or perhaps bring them overland.

BOB How do we go about getting insurance? Is it tricky?

PAULA Oh, not really. We'll be sending computers regularly to Colombia. So. we'll take out an all risks open policy for, say, fifty thousand pounds (£50.000). It’ll cover consignments from our warehouse to the port of destination - Caracas.

BOB I’m afraid 1 don't know much about insurance terms. What is an all risks open policy?

paula It's a policy that'll cover all consignments made to Mr Carrera over a twelve-month period. Up to a value of fifty thousand pounds (£50.000).

BOB Yes, but what about the ‘all risks’ bit? Can you explain precisely what it means?

paula It means all risks mentioned in the policy.

BOB Such as?

paula Fire, theft, damage of various kinds, like breakage.

BOB I see. To take out an open policy, I suppose we phone our insurance broker.

paula Right. We contact our broker. Then he gets in touch with a Lloyd's¹ underwriter. It's the underwriter who quotes a rate for the shipment and issues the Insurance Certificate. And it's the broker who collects the premium.

BOB If we agree to the rate, are all shipments immediately covered?

paula It works like this. While the policy is being prepared, the broker sends us a Cover Note. As soon as we get that, our consignments are insured.

BOB Mm, there are also some Declaration Forms to fill in, aren’t there?

paula Ah, so you do know something about insurance, Bob! Yes, each time we ship goods, we sign a Declaration Form and send a copy to the broker. It provides a record of each insured shipment.

BOB It sounds fairly simple, this insurance business.

paula Oh, it's dead easy, once you get the hang of it.