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LOGOUnit TenTERMS OF PAYMENT Key to Ex.ContentsPart I PaymentFour major modes of paymentTime of paymentLanguge PointsPart I Payment In international trade, how to get payment of the goods delivered is a matter of utmost concern to the seller, simply because it is not easy to follow bad debts when the buyer lives in a foreign country. Payment clause is very important in an international sales contract including such aspects as amount, time, place, currencies, modes and instruments of payment. Basically, there are three major modes of payment that the buyers may adopt, namely remittance, collection and letter of credit ( L/C ). four major modes of payment Open Account 赊帐，记帐交赊帐，记帐交易易 Remittance 汇付汇付 Collection 托收托收 Letter of Credit ( L/C ) 信用证 信用证Remittance Mail Transfer ( M/T ) 信汇信汇 Telegraphic Transfer ( T/T ) 电汇电汇 Demand Draft ( D/D ) 票汇票汇Collectionclean collectiondocumentary collectiondocuments against payment ( D/P )documents against acceptance ( D/A )Letter of Credit ( L/C ) sight L/C usance L/C time L/Cterm L/CTime of payment Payment in advance 预付货款预付货款 Payment at sight 现付 现付 Deferred payment 延期付款 延期付款 This mode of payment means that the payer (usually the buyer) remits a certain sum of money in accordance with the parties agreement to the payee ( usually the seller ) through a bank. Payer may remit the sum in the following manner: Mail Transfer ( M/T ) Telegraphic Transfer ( T/T ) Demand Draft ( D/D ) This method of payment is often used for down payment, payment of commission and for sample, settlement of claim, or as performance bond etcRemittance Collection is a paying arrangement under which the exporter, as drawer of a bill of exchange, hands the bill of exchange to his bank, who in turn forwards it to the buyer through a collection bank in the buyers country. A bill of exchange is a written order to a bank or a customer to pay someone on demand or at a fixed time in the future a certain sum of money. It is also called a draft or simply a bill.Collection A collection is a “clean” one if the seller only draws a bill of exchange on the buyer without handing over any shipping documents to him; if it is one under which shipping documents accompany the bill of exchange, the collection is known as “documentary collection”. Generally, clean collection is used for collecting small amount of incidental expenses or other payments to a transaction like sample fees, commission, or some odd amount out of the whole payment etc. Documentary collection falls into two major categories: one is documents against payment ( D/P ), the other, documents against acceptance ( D/A ). Documents against payment, as the term suggests, is that the collecting bank will only give the shipping documents representing the title to the goods on condition that the buyer makes payment. Under this paying arrangement, the selller may either draw a sight bill or a time (usance) bill. The former is called “D/P sight”, while the later, “D/P after sight or after date”. In the case of D/P sight, the collecting bank presents a sight bill to the buyer, who must make immediate payment after presentation of the bill and gets the shipping documents in return. If it is D/P after sight or date, the buyer must first accept the usance bill when the bank presents it to him, and will make payment when the bill falls due. At that time the buyer can obtain the relevant shipping documents. Where the paying arrangement is D/A, the collecting bank will only give the buyer the shipping documents after buyers acceptance of the time bill drawn on him, ie. The buyer signs his name on the bill promising to pay the sum when it matures. In return he gets what he needs-the shipping documents. Under D/A, the seller gives up the title to the goods-shipping documents before he gets payment of the goods. Therefore, an exporter must think twice before he accepts such paying arrangement. It is because once he loses control of his goods, he relies entirely on the creditworthiness of the buyer. It is very risky for him to get payment in this manner. A letter of credit is a written undertaking, given at the request of the buyer, by the buyers bank (the issuing bank ) to pay a seller (the beneficiary ), usually through an advising or negotiating bank in the beneficiarys country, provided the terms and conditions of the credit are complied with and documents called for by the credit are presented within the time limit specified.Letter of Credit ( L/C ) The fundamental difference between letter of credit and collection arrangements is that the former is bankers credit, under which the bank is fully responsible for payment as long as the buyer has done exactly what is prescribed under the L/C; the latter is commercial credit, under which banks only act as agents to collect payment form the drawee of the bill of exchange. Banks bear no responsibility if the buyer dishonors (refuses to pay) the bill. Therefore whether the seller can get payment all depends on the creditworthiness and commercial integrity of the buyer. In international trade, most extensively used credits are irrevocable letters of credit, which means that they cannot be revoked without the beneficiarys agreement. On the contrary, a revocable L/C is one that the issuing bank can cancel or revoke the contents of the L/C without consent of the beneficiary. Therefore most exporters do not accept revocable letters of credit. One thing we must pay attention to is that according to some international trade usage, if an L/C does not state itself as “irrevocable”, the L/C is considered as a revocable one. a. Payment in advance. After the conclusion of a sales contract, the importer pays the purchase price for the goods to the exporter before the exporter begins to make arrangement for manufacturing or delivering the goods. b. Payment at sight. When the exporter has shipped the goods, he tenders a sight bill and the required shipping documents to the buyer or his bank, asking the latter to make payment at sight of the draft. Collections with sight draft or sight L/C arrangement are payment of such type. c. Deferred payment. Under this arrangement, the buyer may make payment of the goods a period of time after he has taken delivery of the goods. Time of paymentLanguage Points 1. payment: n. 支付；支付的款项 make / effect payment 付款 terms of payment 或 payment terms 支付条款 payment on deferred terms 迟期 (延期 )付款 installment payment 分期付款 付某种费用的款 ,如发票 , 费用 ,佣金等 ,常用 “in payment of” e.g. We are enclosing our Cheque No. B 123 issued by the Barclays bank, London for Stg. 2000 in payment of your Invoice No. 56. 兹寄去伦敦巴克莱银行所开的第 B123号支票一纸 ,金额计 2000英镑 ,系付你方的56号发票之款 . 付某种具体事物的款 ,如商品 ,广告 ,样品等 ,常用 “in payment for” E.g. We airmailed you yesterday a series of “Hua Sheng” Brand Electric Fans as samples and looking forward to your US$ 230 in payment for the above. 我方昨日空邮去 ”华生 ”牌电扇系列样品,并盼望收到你方金额计 230美元的支票 ,以偿付上述样品 . pay: vt. time L/C; term L/C 以见票 30天议付的信用证为例： 1) L/C available by draft at 30 days after sight 2) (usa