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1、3.2.1 Terms of Payment1.Brief introduction of terms of paymentletter of creditcollectionremittancebankers guaranteecommercial creditLetter of creditLetter of credit is a bankers guarantee that payment will be made on presentation of all the required shipping documents.We can have many kinds of L/Cs
2、from different points of views.Sight L/C and Usance L/CClean L/C and Documentary L/CConfirmed L/C and Unconfirmed L/C,etc.L/C is a reliable and safe terms of payment.It provides the seller with additional bankers guarantee and facilitates trade with unknown buyers;meanwhile,the buyer will get the gu
3、arantee that the seller will fulfill the contract according to the L/C stipulations.Thus it gives protection to both sellers and buyers.So L/C becomes the most generally used terms of payment in international trade.RemittanceRemittance means the buyer send the payment through bank or other forms to
4、the receiver initiatively.It is divided into three forms of mail transfer(M/T),telegraphic transfer(T/T)and demand draft(D/D).CollectionCollection means the creditor issues the bill of exchange and entrusts the bank to collect the payment of the shipment.It has two forms of documents against payment
5、(D/P)and documents against acceptance(D/A).D/P can be divided into D/P at sight and D/P after sight.collectionD/PD/AD/P at sightD/P after sightAs for as the sellers benefit is concerned,L/C is better than collection,and collection is better than remittance.D/P at sight is better than D/P after sight
6、 is better than D/A.In international trade,payment through collection is accepted only when the financial standing of the importer is sound or the previous business has made the exporter sure that the importer will be good for payment.If the amount involves is rather small,remittance is also accepta
7、ble.Notes1.Payment terms=terms of payment =methods of payment =modes of payment2.Remittance T/T(Telegraphic Transfer)M/T(Mail Transfer)D/D(Demand Draft)3.Collection D/P(document against payment)D/A(document against acceptance)4.at our end at your end We appreciate your efforts to push sales of our p
8、roduct at you end.5.enter into6.deal with 7.Settle settlement They reach an amicable settlement through negotiation.8.tie up of fund trying up funds tie-up funds9.accommodation10.usual practice11.as an exceptional case12.transaction 13.in favour of14.Packing list15.At 60 d/s-at 60 days sight16.Matur
9、ity17.Discount-to discount a bill means to acquire it by purchase for a sum less than its face value18.underpayment19.HEVER-however PAYT-payment SEAFRT-sea freight1.Bill of exchange;draft2.Promissory Note3.Cheque;check4.Drawer5.Drawee/Payer6.payee7.At days after sight8.At days after date9.At days af
10、ter date of B/L10.At a fixed date in future汇票的使用汇票的使用1.Issue 出票出票2.Presentation 提示提示3.Acceptance 承兑承兑4.Payment 付款付款5.Endorsement 背书背书6.Dishonour 拒付拒付How to negotiate the terms of paymentUsually the buyers adopt the following three steps to write a letter to negotiate payment terms:Mention the Contra
11、ct,goods,etc.;Suggest the terms of payment and give out the reason;Wish the reader to accept.When the seller received the buyers letter,the seller also adopts three steps to complete the letter:State that you have received the letter;Give your reply of agreeing or refusing and your reason;State your
12、 good will and your wish to do business with the reader.Dear sirs,Lets introduce ourselves as a corporation specializing in the import&export of textiles.We know you corporation through your website.After carefully study your catalogue,we are pleased to tell you that we are interested in your produc
13、ts item No.1 and No.2 item,we have confidence that your goods will enjoy good sales at our end.Would you please send us a price list,stating the payment terms you usually accept for your exportation?We will place orders with you for the above-mentioned items if your offer is acceptable.We look forwa
14、rd to your early reply.Sincerely your,Dear sirs,We are pleased receive your letter dated May 23.And we appreciate your intention to push the sale of our products at your end.As our usual practice,payment is to be made by a confirmed,irrevocable letter of credit payable by draft at sight,to be opened
15、 30 days before the time of shipment and to remain valid for negotiation in China within 15 days after the date of shipment.Enclosed is a price list for the items you mentioned.We hope the terms on the list will be acceptable to you and wish to enter into business with you soon.Dear sirs,We are in r
16、eceipt of your letter dated August 10 and wish to place an order for 10,000 pieces of electronic toys with you for October shipment.We have been dealing with you on sight L/C basis for years and always settled our account promptly.This is a big order involving about USD200,000 and now we have only m
17、oderate cash reserves,tying up funds for three months would cause problem for us.So for this order,we would like to pay by 30 day L/C.We look forward to your favorable reply to the new payment terms and your sales confirmation.If you can do us a favor this time,please send us your sales confirmation
18、 earlier so as to enable us to open the L/C immediately.Dear sirs,Thanks for your order of 10,000 pieces of electronic toys.Your proposal of paying by 30 day L/C has been carefully studied by us.Usually we only accept confirmed,irrevocable L/C payable by draft at sight.However,in view of our long-te
19、rm friendly relations,we agree to accept your proposal to pay by 30 day L/C.But we wish to make it clear that this accommodation is only for this transaction.We cannot regard it as setting a precedent for future transactions.We enclose our Sales Confirmation No.ES16 covering the order and look forwa
20、rd to your L/C.Sincerely yours,Dear Sirs,Reference is made to your contract No.339 covering Cotton Underwear in the amount of GBP 700 and contract No.340 for silk blouse in the amount of GBP 600.As both these contracts are less than GBP 1000 in value,we would appreciate it very much if you could shi
21、p the goods to us on T/T basis.We hope you will accommodate us in this respect and look forward to your favorable reply soon.Yours faithfully,Letter 5Dear Sirs,We are in possession of your letter of October 8 and have noted your request for payment by T/T for contract No.339 and No.340.We regret tha
22、t we are unable to consider your request for payment on T/T terms,according to our usual practice,we ask for payment by L/C.But in view of the amount of two transactions being very small,as an exceptional case,we are prepared to accept payment for contract No.339 and No.340 on D/P at sight basis.But
23、 we think it advisable to make it clear that D/P will only be applicable if the amount involved for each contract is less than GBP 1,000.We hope that the above payment will be acceptable to you and look forward to hearing from you soon.Sincerely yours,Payment in foreign trade is complicated.The meth
24、od of payment for each transaction is to be agreed upon between the two trading parties at the time of placing an order.The most often adopted method of payment in our foreign trade is payment by the letter of credit.Dear sirs,We enclose an application form for documentary credit and shall be glad i
25、f you will arrange to open for our account with your office in London an irrevocable letter of credit for$in favor of the Urban Trading Company,the credit to be valid until Nov.30.The credit which evidences shipment of 2,000 tons of Steels may be used against presentation of the following documents:
26、Bills of Lading in triplicate,one copy each of Commercial Invoice,Packing List,Certificate of Insurance and Certificate of Origin.The company may draw on your London office at 60 d/s for each shipment.Yours faithfully,Dear Sirs,As instructed in your fax of 2 May we are arranging to open a letter of
27、credit with our office in London in favor of the Urban Training Company,valid until 30 November.Please check our enclosed telex opening the credit to ensure that it agrees with your instructions.As soon as the credit is used we shall debit your account with the amount notified to us as having been d
28、rawn against the L/C.We shall see to it that your instructions are carefully carried out.Yours faithfully,Dear Sirs,Please be informed that we have now opened an irrevocable letter of credit in your favour for$with the ABC Bank,London,valid until 30 November.The letter of credit authorizes you to dr
29、aw at 60 days on the bank in London for the amount of your invoice after shipment is made.Before accepting the draft,the bank will require you to produce the following documents:Bills of Lading in Triplicate,Commercial Invoice,Packing List,Certificate of Insurance and Certificate of Origin.We will e
30、xpect your consignment about the middle of November.Yours faithfully,Dear sirs,On instructions from Browning&Sons,received through our Hongkong office,we have opened an irrevocable letter of credit for$in your favor,valid until 30 November next.You have authority to draw on us at 60 days against thi
31、s credit for the amount of your invoice upon shipmen of 2,000 tons of Steels to Browning&Sons.Your drafts must be accompanied by the following documents,which are to be delivered to us against our acceptance of the draft:Bills of lading in triplicate,Commercial Invoice,Insurance Certificate and Cert
32、ificate of Origin.Provided you fulfill the terms of the credit we will accept and pay at maturity the draft presented to us under this credit and,if required,provide discounting facilities at current rates.Yours faithfully,Dear Sirs,We have today received LC/AC-3 covering the shipment of 2,000 tons
33、of Steels.After we have checked the L/C carefully,we request you to make the following amendments:1.The quantity should read:2,000 Metric tons(5&more or less at Sellers option)2.Partial shipment and transhipment allowed.3.The last shipment date to be extended to end November and the validity of the
34、credit to December 15.Please confirm the amendments by telex,so that we may arrange shipment accordingly.Yours faithfully,Dear Sirs,Referring to your advice of 10 May,we enclose shipping documents for the consignment of 2,000 tons of Steels to Browning&Sons.As required by them we have included all c
35、harges in our invoice,which amounts to$and enclose our draft at 60 days for this sum.We shall be glad if,after acceptance you will discount it at the current rate and remit the net amount to our account with the Bank of England,London.We thank you for your help in this matter.Your faithfullyDear Sir
36、s,As instructed by your fax of 12 May,our London office have just accepted for your account a bill for$drawn by the Urban Trading Company for the consignment of 2,000 tons of Steels to you by m.v.”Star”.We have debited your account with this amount and our charges amounting to$The vessel left London
37、 on 3 October and is due to arrive in Xingang on 4 November.The shipping documents for the consignment are now with us and we shall be glad if you will arrange to collect them.Yours faithfully,Dear sirs,We refer to our L/C No.AC-3 covering 2,000 metric tons of Steel shipped on 3rd October.The shippi
38、ng documents were presented to us yesterday.Upon checking the above-mentioned documents we found the following discrepancies:1.The invoice value includes 5%commission which is not mentioned in the letter of credit.2.The documents are for the shipment of 1,000 tons of steels,but partial shipment is n
39、ot allowed as stipulated in the L/C.In view of these discrepancies we had to refuse to accept the draft.Now we hold the documents at your disposal and await your instructions.Yours faithfully,Dear Mr.We have just learned from our agent that the original idea to tranship Contract KJ-109 has been chan
40、ged,and the carrying vessel will continue to sail on from the transhipment port through to the destination,Shanghai on or about 4th May.The name or the carrying vessel is Silver Thread as advised previously.Now that the Buyers have the vessels name and the documents,there is no further reason to del
41、ay payment.We,therefore,expect confirmation on Monday that payment has been tele-transferred to our account.Yours sincerely,ExercisesChoose the best answer.1.As agreed upon in our negotiations,payment _L/C.A.by B.is by C.will be D.will by2.Taking into consideration our long standing business relatio
42、ns with you,we accept _ by D/A.A.enquiries B.invitations C.installment D.payment3.In order to promote business between us to our mutual benefit,we shall consider payment by D/P at 60 days.A.accepting B.accept C.to accept D.acceptance4.We shall be glad if you agree to ship the goods to us _ Cash Agai
43、nst Documents basis.A.with B.during C.in D.on5.As the amount involved is rather small,we agree to draw _ you by documentary sight draft.A.with B.to C.in D.on1.If the amount _(exceeded,exceeds)that figure,an L/C_(was,be,is)required.2.For future transactions D/P will be accepted if the amount _(involv
44、ed,involving)is not up to GBP 1,000.3.We have _(entered into,entered)an agreement on the technological transfer.4.We hope our new arrangement of payment will help you to _(push the sale of,push sale with)our products.5.We have confidence that our silk piece goods will find a ready market _(at your e
45、nd,in your end).1.In order to facilitate your efforts in introducing our products to your market,we would consider,as an exception,accepting payment by D/P at sight.2.We regret to have to decline your request for D/P terms.Payment by L/C is our usual practice in these traditional goods.3.As the valu
46、e of this order is rather small,we trust you would agree to our making payment by mail transfer after receipt of the documents.4.As we must adhere to our customary practice,we sincerely hope that you will not think us unaccommodating.5.In compliance with your request,we exceptionally accept D/A paym
47、ent terms,but this should not be regarded as a precedent.Buyer instructs bankBank agrees to open creditBuyer notifies exporterBank issues letter of creditAmending letter of creditExporter presents documentsBank refused paymentExporter urges paymentSentence structures and ExamplesStructure 1 With ref
48、erence to/regarding/as to/as forWith reference to your order No.367,we approve your quantity discount.Structure 2You are requested to do somethingYou are requested to amend the L/C as per the terms and conditions of you contract.Structure 3 See to it thatso thatPlease see to it that the stipulations
49、 of L/C are in full accordance with the terms and conditions of our contract,so that we can fulfill the order smoothly.Structure 4 Instruct(bank)to issue(Letter of Credit)for(amount)in(ones)favorWe have instructed our bank,Bank of China,Shanghai branch,to issue a confirmed irrevocable L/C for USD 65
50、0,000 in your favor.Structure 5Draw on at sightforYou may draw on Bank of China,Tianjin branch at sight for the amount of the invoice.Structure 6Valid untilThe L/C will be valid until November 14,in China.Structure 7With 5%more or less at sellers optionWith 5%more or less both in quantity and amount