Page 100 - International Marketing

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102 International Marketing BRILLIANT'S

by a declaration in the form SDF in respect of Electronically Processed
Shipping Bills.
3. Letter of Credit: Letter of credit, popularly known as L/C, is one of
the most important single document in international trade. It forms the
basis of a very large volume of world trade. Through the instrument of L/C,
the promise to pay usually made by the overseas importer is substituted
by the promise to pay by his banks. It is useful to the exporter which gives
him great security. The exporter should carefully examine the terms and
conditions of the L/C to ensure: (i) that he can meet them and (ii) it conforms
to the basic contract he has entered into with the importer. If there are any
differences, he should get in touch with the bank and the importer to
arrange for an amendment.
4. Bill of Exchange: When a draft is drawn on a foreign bank it is
known as a foreign draft or bill of exchange. A bill of exchange, is thus, a
means of collecting payment from the foreign buyer through the banking
channel. It is also a method of extending credit. It has two main functions.
If the bill of exchange is payable at sight, it becomes a demand for payment
and a receipt for payment made. If the bill of exchange is payable at some
future date after sight, it is demand for payment by the exporter, a promise
of payment by the importer and a receipt for payment after such payment
has been made.
The bill of exchange under a documentary credit must be drawn strictly
in accordance with the terms of the credit. The bill will be drawn strictly in
accordance with the terms of credit. The bill will be drawn on the bank
through which the credit is opened, advised or confirmed.
5. Bill of Lading: Bill of Lading (B/L) is a document which is issued
by the shipping company acknowledging that the goods mentioned there
have been placed on board the ship and an undertaking that the goods in
like order and condition as received will be delivered to the consignee,
provided that the freight specified therein has been duly paid. The bill of
lading has the following main functions:
(i) It is a document of title of the goods shipped.
(ii) It is receipt for goods.
(iii) It is an evidence of the contract of affreightment.
When the export contract is cost insurance freight (c.i.f.), the exporter
makes payment of the freight and gets "freight paid" Bill of Lading. On the
other hand, if the contract is free on board (f.o.b), the freight has to be paid
by the importer. In that case, the shipping company will issue a "freight
collect" Bill of Lading. The Bill of lading should give the details about the
exporter, carrying vessel, goods shipped, port of shipment, destination,