III. Reading assignments.

Ex 1. Skim through the reading and answer the following questions.

1. What special difficulties may be encountered in foreign trade?

2. What two methods of international payment do you know?

3. What are the main generally accepted terms for all types of payment?

4. What is a Bill of Exchange?

5. When does a bill of exchange become a legally binding agreement to pay?

6. What document gives full details of shipment?

7. What types of letter of credit do you know?

8. What is the difference between revocable letter of credit and irrevocable letter of credit?

9. With your partner you agreed on letter of credit method of payment. Being an importer what letter of credit would you prefer? Why?

10. What is an order to the importer to pay immediately called?

11. What is a Term Bill?

Ex 2. Consider the following phrases and complete the table listing the number of each phrase in corresponding column:

Opening an account	Payment and special instructions	The buyer writes to the seller	The seller writes to the buyer

1. Please transfer $100 to the Westland Bank Ltd., to the credit of Clerk and Sons Ltd., debiting our No.1 account.

2. Please draw on us for the amount of your invoice and attach the documents listed below to your draft.

3. We propose to pay by bill of exchange at 30 d/s, documents against acceptance. Please confirm if it is acceptable to you.

4. In accordance with our terms of payment we have drawn on you at 30 days' sight for the amount of the enclosed invoice.

5. Kindly effect the following payments for us...

6. Your proposal to pay by draft is acceptable to us and we shall accordingly draw on you at two months from date of shipment of your order.

7. You may draw on our London agents, Messes... at 60 d/s for the amount of your invoice. Our agents have been instructed accordingly and advised on the terms of our agreement.

8. Kindly instruct our correspondent in Zurich to release the documents to the drawee only on settlement of our sight draft for $...

9. Please pay to the XYZ Banking Corporation on the 15th of each month and till further notice, the sum of $... for the account of John Brown.

10. We have received your letter and invoice dated 3 January and are willing to accept your draft for the amount involved, payable at 60 days' sight.

11. We are pleased to confirm that each shipment will be separately charged and that we shall draw on you under advice¹ for the invoice amounts.

12. Please open a current account for us in the name of John Smith & Co. We enclose specimen signatures of the partners, either of whom may sign checks on our behalf. Will you kindly open No.1 account with $750 and place $250 to our credit in a No.2 account.

13. With effect from 1 January will you please discontinue payment to the Great Eastern Bank authorized in our letter of 1 June last.

14. To open the account we enclose a check on the XYZ Bank for $...

15. Your draft of 25 April has been accepted and will be given our protection².

16. Referring to the instructions regarding payment to J.J.Hooper Ltd., and contained in our letter of 3 April 19--, we now wish to cancel these.

17. Kindly open the account in my name. I am instructing my bank... to transfer the equivalent of S.Fr.... for this purpose.

18. We are quite willing to put your account on a 60 d/s D/A basis and will make this effective from 1 January.

19. Kindly cancel the credit opened in favor of Miss ... as alternative arrangements have been made.

20. We have to ask you to stop payment of our check No. ... drawn on 23 September in favor of Johnson Bros., until further notice.

21. Please advise us of the present interest rate on deposit accounts and approximately what balance you require us to keep in our current account to eliminate charges.

22. Please suspend payment of our check No. ... drawn in favor of Messrs. Pink and Brown, as it appears to have been lost in the post.

23. Please purchase at the best possible rate the following foreign currency, and debit to our current account.

Ex 3. Match English phrases in column A with the corresponding Russian ones in column B.

A

1. Kindly effect the following payment for us.

2. Please draw on us for the amount of your invoice.

3. We propose to pay by B/E at 30 d/s, documents against acceptance.

4. We have drawn on you at 30 days’ sight for the amount of the enclosed invoice.

5. In accordance with our terms of payment.

6. Kindly instruct our correspondent to release the documents to the drawee only on settlement of our sight draft for $ …

7. Our agent has been advised on the terms of our agreement.

8. Please open a current account for us in the name of …

9. We enclose specimen signatures.

10. You may sign checks on our behalf.

11. We confirm that each shipment will be separately charged.

12. With an effect from 1 January will you please discontinue payments to XYZ Bank.

13. Your draft of 25 April has been accepted and will be given our protection.

14. Please pay to the XYZ Banking Corporation on the 15^th of each month and till further notice.

15. Referring to the instructions regarding payments to J.J. Hooper Ltd, we now wish to cancel these.

16. I am instructing my bank … to transfer the equivalent of S.Fr … for this purpose.

17. Kindly cancel the credit opened in favor of Miss … as alternative agreements have been made.

18. Please suspend payment of our check No … drawn in favor of Messrs. Pink & Brown as it appears to have been lost in the post.

19. Please purchase at the best possible rate the following foreign currency, and debit to our current account.

B

1. Предлагаем оплату переводным векселем в течение 30 дней после выставления на условиях «документы против акцепта».

2. Просим проинструктировать нашего агента, что он может передать документы трассату только после того, как наш предъявительский вексель на сумму … будет оплачен.

3. Нашим агентам были сообщены условия нашего соглашения.

4. Просим произвести на наш счет следующие выплаты.

5. В соответствии с нашими условиями платежа.

6. Мы выставили вам предъявительский вексель с оплатой в 30-дневный срок на сумму прилагаемого счета.

7. Просим выставить нам переводной вексель на сумму, указанную в вашем счете.

8. Прилагаем образцы подписей.

9. Мы подтверждаем, что за каждую поставку плата будет взыскиваться отдельно.

10. Вы можете подписывать чеки от нашего имени.

11. Просим открыть нам текущий счет на имя …

12. Ваша тратта от 25 Апреля акцептована и будет оплачена по предъявлению.

13. Просим производить выплаты банковской корпорации XYZ 15-го числа каждого месяца вплоть до следующего уведомления.

14. Начиная с 1 Января, просим прекратить платежи на счет XYZ банка.

15. В настоящее время я делаю поручение своему банку … перевести сумму, эквивалентную … швейцарским франкам для выполнения этой задачи.

16. В отношении поручения о выплате Дж.Дж. Хупер Лимитед, мы хотим прекратить его действие.

17. Просим ликвидировать кредит, открытый на имя Мисс … в связи с тем, что были подготовлены альтернативные варианты.

18. Просим приобрести следующую иностранную валюту по максимально выгодному курсу и отнести затраты на наш расчетный счет.

19. Просим приостановить выплату по нашему чеку No …, выписанному на имя компании Пинк и Браун, т. к. оказалось, что чек утерян при почтовой пересылке.

Ex 4. The trainee is asking the Accounts Manager questions about the Bills for Collection method of international payment (Method I). Here are the answers. What are the questions?

For example: What does 'importer' mean?

It means 'buyer of goods from another country'.

1. __________________________________________________________________________

It means 'documents used in the shipping of goods'. For example, the Bill of Lading, the Insurance Certificate, the Commercial Invoice, etc.

2. __________________________________________________________________________

It means 'firm that transports goods by ship from one country to another'.

3. __________________________________________________________________________

It means 'tell the importer to pay'.

4. __________________________________________________________________________

It means 'sends the goods', usually by sea or air.

5. __________________________________________________________________________

It means 'seller of goods to another country'.

Later, the trainee talks to another trainee about the Bills for Collection method of international payment. Is what he says right? (Use right or wrong, and correct where necessary)

For example: Wrong. The exporter ships the goods.

1. Of course, the importer ships the goods, you know.

2. The exporter gives a Bill of Exchange to his bank to send to the shipping line.

3. The importer's bank pays the Bill of Exchange.

4. The shipping line releases the goods to the importer, and then gets the shipping documents.

Now the trainee is asking the Accounts Manager about the Letter of Credit method of international payment (Method 2). Here are the answers. Again, what are the questions?

For example: What does 'open credit in favor of the exporter' mean?

It means 'promise to pay the exporter'.

1. ___________________________________________________________________________

It means 'a promise to pay'. In this document the importer (buyer) promises to pay the exporter (seller) through a bank - but first the exporter must deliver the goods exactly according to the contract.

2. ___________________________________________________________________________

It means 'an order to the buyer to pay, but not immediately - usually after 30, 60, 90 or 120 days'.

3. ___________________________________________________________________________

It means 'an order to the buyer to pay immediately'.

A student of international trade has just done an exam. Here are his answers to questions about Letter of Credit (Method 2). You are the examiner. Use right or wrong and correct where necessary.

For example: Wrong. The exporter and the importer agree the sale.

1. The importer's bank and the importer agree the sale.

2. The importer's bank opens credit in the exporter's favour.

3. The exporter's bank receives the Letter of Credit from the importer's bank.

4. The exporter gives the Bill of Lading to the shipping line.

5. The exporter's bank pays back the importer's bank.

6. The shipping documents go from the exporter to the exporter's bank, then to the importer's bank, then to the shipping line, then to the importer.

Did the student pass the exam? (the pass mark is 50%!)