11.

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Bills Of Exchange
A bill of exchange is an unconditional order in writing, addressed by one person (drawer) to another (drawee) signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed future time a sum of money to a specified person. ills of !xchange can be transferred by endorsement. "he person who transfers them is the endorser, the other one to whom it is transferred is the endorsee. Any endorser is fully liable for the bill and must pay it if the acceptor fails to pay. #f an endorser does not want to be hold responsible for the bill, he writes a signature$ without recourse to me. ill of exchange must be presented for payment during business hours on the day they are due. #f the date of maturity falls on %unday or any other holiday, the bill is due on the last wor&ing day. #f it falls on a ban& holiday, the bill is due on the next wor&ing day. #f the drawee refuses the bill or to pay on maturity, the bill is said to be dishonoured and must be protested. "he bill payable at a future time might sold to a ban& or a discounting house, which pays the sum of the bills less interest and discounting charges.

Terms of Payment
"here are four basic terms of payment used in foreign trade$ 1. Payment in advance is the most advantageous for the seller and disadvantageous for the buyer. #t is not very often employed, except when the goods represent high value. '. Documents against Payment is more often employed. "his means that the buyer and seller agree upon payment simultaneously with the delivery. ecause of the distance between the partners the problem is solved so that while the goods have been dispatched and are on their way to the buyer, the documents are given to the buyer against payment of the countervalue. (. "he most usual method of payment is the Letter of Credit. "he ban&s (one in the seller)s country, one in the buyer)s country) are entrusted to carry out the tas& a *etter of +redit charges them with. "he procedure of establishing a *etter of +redit is the following, "he buyer deposits a certain amount of money (covering the countervalue of the goods) in his ban& and instructs it to open *-+ in favour of the seller. "he buyer)s ban& informs the seller)s ban& about a *etter of +redit opened in the seller)s favour and as&s the ban& to advise the seller about this fact. "he *-+ is valid to a certain date which is clearly indicated in it. #ts amount can be paid to the beneficiary only if the conditions are fulfilled by him up to that time. "he validity of the *-+ can be extended. .. Payment after delivery is /ust as disadvantageous for the exporter as payment in advance is for the importer. #t is rarely used and is granted only to firms of reliable financial standing.