Professional Documents
Culture Documents
In negotiating price and payment, What should the price the exporter quotes
relate to?
=> The complete set of contract terms: size of order, terms of delivery, terms of
payment,warranty
2. provisions and
so on.
How can the exporter avoid the "price trap" occurred in many negotiations when
the buyer demands concessions about delivery time, method of payment, etc?
=> As items in the contract are negotiated, the exporter should assess the
influence of each factoron price, and adjust the price accordingly. Sometimes the
exporter improves his terms withoutadjusting the price, but only in order to
create goodwill for future deals, to ensure that theexporter gets the order, or for
some other business reason.
3. What are the 5 steps in negotiating payment?
=> - Mode of payment: How will payment be made?
-Timing: What is the date of payment?
-Place of payment: Where must the money be before payment is considered
complete?
- Delay: What delay in payment is excusable?
-Results of delay: What are the results of non-excusable delay in payment?
4. Why payment in international trade tightly controlled?
12. What does the exporter have to suffer from late payment?
Bank interest.
15. Whatpoints at which money is deemed to be paid does the Buyer prefer?
-When the buyer instructs the bank to pay.
-When the buyer pays the money into his bank.
16.What points at which money is deemed to be paid does the Seller prefer?
-When the buyer’s bank transfers funds.
-When funds reach the seller’s bank account.
18.What payment does the importer have to pay the exporter in case of late
payment? Compensation for losses due to late payment.
20.In order to take out non- payment risk insurance, what does the exporter have
todo?
Contact an insurance company and explain the details of the business, applies for
a quotationfrom the insurance.
28. What are some common guarantees in business? Explain each of them
briefly.
-For the risk of non-payment: Payment guarantee.A payment guarantee makes
sure that the exporter will receive payment. It commits the bankto pay if the
buyer defaults. The payment guarantee is usually for 100% of the contract price.
-For the risk of revocation: Tender guarantee.This type of guarantee is used in
case that the exporter who bids on a contract to supply goodsor materials to a
government department or agency is withdrawn. A normal figure for
tenderguarantee is usually from 1.5% to 5% of the contract price.
-For the risk of non-performance: Performance guarantee.Performance
guarantee makes sure that if the exporter works badly or not at all, the guarantor
will pay, within stated limits, the costs of the exporter’s failure to perform. A
figure for performance guarantee is from 5% to 10% of the contract price.
-For the risk of losing prepayment: Prepayment guarantee.This guarantee
promises the buyer that the bank will return advance payments if the
exporterfails to deliver. The guarantee is often for 100% of the prepayment.
35. Explain the two principles that make letters of credit safe for both exporter
and buyer: Autonomny
and Strict.
compliance
-Autonomy means that the L/C is a contract in its own right, entirely separate
from thecontract for the safe of goods.
-Strict compliance means that the exporter must present to the bank shipping
documentsthat comply in all respects with the terms of the credit. Small
deviations will result inrefusal by the bank to pay.
36. What are the most common problems with L/C that cause discrepancies?
-Documents required by the credit are missing.
-Documents required to be signed are not signed.
-The credit amount is exceeded.
-The credit has expired.
-Documents are not presented within the required time.
-Shipment was short.
-Shipment was late.
37. What are the 3 ways the exporter can proceed once the bank has
indicateddiscrepancies? -Provide the missing paperwork or correct errors.
-Ask the buyer to instruct the bank to change the terms of the letter of credit, i.e.,
to issue anamendment. -Ask the bank to process the letter of credit with the
discrepancies but to pay only when(and if) the issuing bank permits payment.
45. Ifa Letter of Credit requires“ a full set of original air waybills” to be
submitted, what will be the problem for the exporter?
Normally, an air waybill is issued in 03 originals and 09 copies. If a L/C requires
“a full set oforiginal air waybills”, this is obviously a mistake or an incorrect
requirement.
Only the secondoriginal goes to the buyer or consignee. The exporter cannot
submit that full set and may berefused by the issuing bank when asking for
payment as the bank must insist on strictcompliance.
48. About the expiry date of a Letter of Credit, why does buyer wants an early
datewhile exporter wants
a later The buyer will want an early date to save bank charges.
date?
-
-The exporter will want enough time after delivery to present the documents and
to correctany discrepancies that might be discovered by the bank.
-At-sight L/C.
-Advised L/C.
-Back-to-back L/C.
-Confirmed L/C.
-Deferred Payment L/C.
-Irrevocable L/C.
-Red Clause L/C.
-Revocable L/C.
-Revolving L/C.
-Stand-by L/C.
-Transferable L/C.
-Traveler’s L/C.
-Unconfirmed L/C