Bill of Exchange

Group 4
 Bill of Exchange
• To finance foreign trade transaction by adding the
banks credit to that of the importer.
• The company from whom the said importer is
buying the goods may be contented to make
delivery of the merchandise in consideration for
an acceptable promise to pay at a later date
• An instrument to evidence promise made by the
importer that the bill of exchange payable at
some future time has arisen.
• Made payable in future time in order to enable
the importer who receive his merchandise
enough time within to make use of them in
production and dispose the finished goods
• First introduce to effect international settlements
and moreover as means of avoiding the shipment
of large quantities of gold.
• Draft are made in duplicate or triplicate copies
with usual custom in the preparation of foreign
traded documents .
• Draft are usually drawn to order of bank in the
country of exportation.
 Draft, classified
• According to tenor
1. Sight draft- immediately payable upon
presentation. Sometimes termed as
presentation draft.
2. Time Draft- calls for payment within a certain
period. Called maturity date
• According to number of days they cover
1. Long bills- drawn covering a period longer than
30 days
2. Short bills- lesser period
• According to documentary attachments
1. Clean Draft-commonly used by the export to
collect an amount from importer for
shipment of merchandise.
2. Documentary Draft- it may either documents
against payment or documents draft against
acceptance draft.
In international trade, it is used almost
exclusively, since the documents gives control
over shipment an make it readily possible to
transfer title to the goods
 Import Documents
1. B/L- written account of goods shipped by any
person, signed by agent of the owner of the
vessel, promising to deliver them safe at place
directed, damages of sea excepted.
3 Important Function of B/L
a. It conveys title to the merchandise
b. it is a receipt of acknowledgement of the goods
signed by the carrier
c. It serves as a contract transportation between
the shipper and the carrier
• Classification of B/L
a. Straight B/L- the exporter or shipper are willing
to surrender title of goods as soon as shipment
is made.
b. Order B/L- the exporter retain security by
consigning the goods to the order of the bank in
country of importation.
c. On-board- indicates that the shipment has been
actually loaded on board
d. Received for Shipment B/L- serves merely to
acknowledge receipt of the goods by the carrier
or its steamship agent w/o indicating whether
the goods are actually or not in vessels
2. Bank Guarantee
One of the major functions of BL is to establish
legal title of ownership imported merchandise.
However, there are certain circumstances which
prevent arrival of the shipping documents including the
BL to enable importer to clear his imported
merchandise from customs custody. Rather than to
wait for arrival of the documents and therefore expose
the merchandise to the risks of theft and pilferage
which are very rampant in our pier, the importer not
infrequently avails of services of his bank for the
issuance of bank guarantee by filing a BL bong.
-letter of guarantee
3. Trust Receipt- receipt given by an importer to the
bank who has loaned money upon imported
goods, or guarantees release of the goods,
vesting title in the lender although the goods are
in the possession of the importer.
4. Consular Invoice- the most exacting document an
exporter is likely to meet. It prepared
meticulously.
5. Commercial Invoice- produced to support entry
of imported merchandise in to the PH, the export
value of which does not exceed 500.00.
6. Certificate of Origin- required by the
government of importing countries are
generally intended to support the entry of
merchandise under preferential treatment by
reason of provisions of certain trade
agreement between the governments of the
exporting and importing countries. In order to
enter into territory of one another under
Laurel-Langley Agreement its effectivity must
necessarily be supported with the production
of certificate of Origin.
7. Marine Insurance Policy Certificates
-it is scarely necessary to state that goods of
whatever nature, whenever transporter across
the seas are subjected or exposed to great risks
caused by perils of the sea. It covers terms ad
conditions of which are generally stipulated on
the face of the marine insurance policy
certificate.
8. Other Documents- required by the government of
the importing country, in accordance with the
nature of the imported merchandise or view of
the requirements of certain existing laws, rules
and regualtions.