Vocabulary:

seafaring	- мореплавание
General Average	- полная гибель (предмета страхования); полная авария
salvage	- спасение (судна и/или груза)
inexpedience	- нецелесообразность

Unit 9

METHODS OF PAYMENT

Lesson 1

Accounts may be paid by means of international money order (for small private transactions), banker's transfer (direct transfer from buyer's to seller's bank), bill of exchange and letter of credit

The banker's transfer is a simple transference of money from the bank account of a buyer in his own country to the bank account of the seller in the seller's country. The transfer is carried out at current exchange rates. Such transfers are subject to any exchange control regulations of the countries concerned. This transaction is simple and can be speeded up by cabled instructions if desired.

The bill of exchange (B/E) is an order in writing from a creditor to a debtor to pay on demand or on a named date a certain sum of money to a person named on the bill, or to his order .The bill is drawn by the creditor on the debtor, and is sent to the debtor for the latter to pay or accept ( i.e. to acknowledge the debt ). The debtor accepts by signing his name on the face of the bill , together with the date .The bill now becomes legally binding , and the acceptor must meet it on or before the due date.

The creditor (drawer) can order the debtor(drawee) to pay the money to any bank named by him on the bill. The drawee, in accepting the bill, can add the name of the bank which he wishes to pay the bill. In this case, the bill stays with the drawer's bank till due for payment, when it will be presented to the paying bank for settlement . Such a bill is said to be domiciled with the holding bank. The B/E is negotiable, which means that it can be used by the holder to pay debts of his own (i.e. he can negotiate it ). To do this, the holder must endorse it, i.e. sign his name on the back of the bill before passing it on to the new holder . The holder may as well sell the bill to the bank, who will pay the face value, less interest, i.e. discount a bill; or leave the bill with a bank as security for a loan.

Failure to meet a bill on the due date would result in total discredit for the drawee, and the legal action can follow. An unpaid bill is said to be dishonoured , and the drawer can protest it, which clears the way for him to prosecute ( take legal action against ) the drawee.

The letter of credit (L/C) most generally used method of payment, ideal for individual transactions or for a series , makes trade with unknown buyers easy, gives protection to both buyer and seller and overcomes the credit gap (i.e. the time-payment loss between order and delivery ).The L/C starts with the buyer. He instructs his bank to issue the L/C for the amount of the purchase and in favour of the seller. The buyer's bank sends these instructions to it's agent in the seller's country. On receiving these instructions, the agent bank writes to advise the seller of the credit. It's normal to confirm the credit. This means that the agent bank undertakes to pay the seller money due to him, provided the conditions set out in the L/C have been complied with. The seller can now execute the buyer's order, knowing that when he has done so, the money will be paid at once by the agent bank . The buyer is equally secure, because the agent bank will pay on his behalf only if conditions of the transaction are fully carried out by the seller. For this reason, great accuracy are needed in giving the original instructions .