OUTLINE

NOTES

<aside> 💡 THEORIES

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Documents in International Payment

• URC 522: 2 types of documents

  • Financial documents: obligations to pay

    • Cheque (séc): a mandate from the customer to his bank to pay according to his instructions/order
    • Bill of Exchange (hối phiếu = giấy đòi tiền): a written, dated, & signed instrument containing an unconditional order by a drawer that directs a drawee to pay a definite sum of money to a payee on demand/at a specified future date
    • Promissory Note (giấy nhận nợ): a written, dated, & signed instrument containing an unconditional promuse by a marker to pay a definite sum of money to a payee on demand/at a specified future date

    → Law on Negotiable Instruments 2005 (Luật về các công cụ chuyển nhượng 2005)

  • Commercial documents: the goods

    • Commercial invoice (hóa đơn TM), Certificate of Origin (C/O) → related to tariffs, Certificate of inspection (chứng từ về kiểm định chất lượng, thường cung cấp bởi bên thứ 3 trước & sau khi đến để xác định chất lượng hàng hóa khi giao & khi đến), Packing list
    • Transport documents:
      • Bill of lading (tương tự mã vận đơn, issued by carrier) serves 3 basic functions
        • Represent control over the goods: Bill of lading holder can direct the carrier to release the goods → Seller must transfer Bill of lading to Buyer so that Buyer can ask carrier to release the goods
        • Evidencing contract of carriage: Bill of lading must contain the terms of contract of carriage, it represents contract of carriage called for by contract of sale
        • Receipt: Bill of lading evidences the delivery of the goods to carrier for shipment (describes goods, states they have been loaded on board in certain quantity, in apparent good order → ‘clean’ Bill of lading)
      • Airway bill, Railway bill
    • Insurance documents

Methods of International Payment

Remittance

• Classification
  • Payment by open account (buys now, pays later)
  • Payment in advance (usually partial advance payments)
• Advantages: fast, convenient
• Disadvantages: risky

→ Normally used for small transactions, when parties have built trust

Collection of payment

Exporter entrusts the collection of payment to its bank (VD người bán nhờ ngân hàng của nước mình thu hộ, ngân hàng ở nước người bán liên hệ với ngân hàng của người mua, ngân hàng của người mua liên hệ với người mua để yêu cầu trả tiền)

• Governing law: ICC Uniform Rules for Collections, Publication No. 522 (URC 522)
• Categories: Art. 2 URC 522
  • Clean collection: collection of financial documents not accompanied by commercial documents (Seller sends commercial documents to Buyer directly)
  • Documentary collection: documents against payment (D/P) vs. documents against acceptance (D/A) (Seller send commercial documents to the Seller’s bank to transfer to Buyer’s bank, Buyer’s bank asks Buyer to pay before handing commercial documents - including Bill of lading - to Buyer to ask carrier to unload goods)
    • Risks: when Buyer does not need the goods anymore → no need of documents (no will to pay); when Buyer goes bankrupt (no ability to pay)
• Advantages & disadvantages
  • Advantages
  • Disadvantages
• When to use

Documentary credits

<aside> ◾ Art. 2 UCP 600: credit means any arrangement, however named/described, that is irrevocable & thereby constitutes a definite undertaking of the issuing bank to honour (pay) a complying presentation (submission of documents complying to conditions pre-determined)

Bank trả tiền cho người bán rồi quay lại đòi người mua

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<aside> ◾ A documentary letter of credit (L/C) is defined as

1. The definite undertaking of a bank

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• Parties in a documentary credit transaction
  • Applicant (Importer - Buyer)
  • Beneficiary (Exporter - Seller)