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Unit16

PaymentTerms

IntroductionPaymentplaysanimportantroleinforeigntrade.Itisoftencomplicated.Themodeofpaymentforeachtransactionistobeagreeduponbetweenthetwotradingpartnersatthetimeofplacinganorder.Basicallytherearethreemethodsofobtainingpaymentforexportshipment:(1)

remittance(includingpaymentinadvanceorcashinorder),(2)

collection(D/P,documentaryagainstpaymentorD/A,documentaryagainstacceptance),(3)

letterofcredit(L/C).ThemostoftenadoptedmodeofpaymentinourforeigntradeisL/C.PartonewillfocusonpaymentbyL/C.ParttwowinfocusonthepaymentbyRemittanceandCollectionPARTILetterofCreditNewWordsNewWords

TextAUrgingtheEstablishingofL/CDearSirs,Withreferencetoyourfaxesdatedthe20thofSeptemberand21thNovember,requestingyoutoestablishtheL/Ccoveringtheabovementionedorder,weregrethavingreceivednonewsfromyouuptillnow.Wewishtoremindyouthatitwasagreed,whenplacingtheorder,thatyouwouldestablishtherequiredL/CuponreceiptofConfirmation.Needlesstosay,weareplacedinaveryembarrassingsituationnowthatonemonthhaselapsedandnothinghasbeenheardfromyou.Asthegoodshavebeenreadyforshipmentforquitesometime,pleasedoyourutmosttorushtheL/Csoastoenableuseffectshipmentwithinthestipulatedtime.WearelookingforwardtoreceivingyouL/CsoonYourTruly,

TextBApplyingforL/CDearSirs,OurcompanyhasjustworkedoutadealwithanAmerican-basedcorporationtoimport50computers.WebothpartieshaveagreedtomakepaymentsbyL/Cagainstshippingdocuments.Weencloseanapplicationformfordocumentarycredit.PleasearrangetoopenforouraccountwithyourofficeinNewYorkanirrevocableL/Cfor$50,000infavorofCenturyCompany,thevalidityofthecreditisuntilJune30th,2011.Yourssincerely,×××××××TextCAdvisingtheEstablishingofL/CDearSirs,WewishtoinviteyouattentiontothefactthatwehavealreadyestablishedourLetterofCreditNo.A7963dated28thJulyforourOrderNo.201010throughtheBankofChina,BeijingBranch,validuntilOctober31.Pleasemaketheshipmentintime.Wewouldliketostressthatanydelayinshippingourorderwillundoubtedlyinvolveusinnosmalldifficulty.Thankyouinadvanceforyourcorporation.Sincerelyyours,×××××××TextDApplicationforAmendmentofL/CDearSirs,WearepleasedtoreceiveyourL/CNo.A046.ButwefoundthereareseveralpointsintheL/Cnotinaccordancewiththeclausesinthecontractasfollows:(1)

TheshipmentshouldbemadeduringAugust/September,insteadof“onorbeforeAugust”.(2)

Thecommissiongrantedforthistransactionshouldbe3%,butyourL/Cdemandsacommissionof5%.Weshallhighlyappreciateitifyoupaypromptattentiontothismatterandgiveusyourresponseattheearliestconvenience.Bestregards,×××××TextEAskingforExtensionofL/CDearSirs,WerefertoyourOrderNo.BJ789for200tonsofLobster.Wearesorrythat,onaccountofthedelayonpartofoursuppliersattheportoforigin,wewillnotbeabletohavethegoodsreadyonorbefore30thSeptember.Wearedoingeverythingpossibletoshipyourorderbutthedateofshipmentisapproaching.WeexpectthatwewillbeabletomeetthedeliverydeadlineofDecember31th,2011,sowouldyoupleasemakeanextensionfortheL/C?Weapologizefortheinconvenience,butthedelayisbeyondourcontrolduetothecircumstances.Thankyouforyourunderstandingandcorporationinthismatter.WehopethatyouwouldextendyourL/Cimmediatelyasrequestedsoastoenableustoeffectshipmentofthegoodsinquestions.Bestregards,××××××××NewWordsPARTIIPaymenttermsTextAAskingforEasierTermsDearSirs,ThankyouforbeingsopromptinsendingthecoveringSalesConfirmationagainstourOrderNo.XX1110.WehavebeendealingwithyouontheL/Cbasisforoverayear.Withreferencetotheaboveorder,wewouldliketochangetopaymentby30-daybillofexchange.WhenwefirstcontactedyouinJulylastyear,youtoldusthatyouwouldbepreparedtoreconsidertermsofpaymentoncewehadestablishedatradingassociation.Wethinkthatsufficienttimehaselapsedforustobeallowedthetermswehaveaskedfor.Aswewillsendanotherorderwithinthemonth,couldyoupleaseconfirmthatyouagreetothesetermsofpayment?Lookforwardtoyourearlyreply.YourTruly,TextBRequestingforPaymentbyD/ADearManager,Thankyouforyourofferforleathershoesandthesamplesyousentus.Havingexaminedyoursamplescarefully,wefoundthequalityofmaterialused,thepricesandtheworkmanshipareuptoourrequirements.Weherebyarepleasedtosendatrialorderfor300piecesofhikingshoes.Asthisparticularorderinvolvesarelativelysmallamount,inthiscircumstances,wewouldliketoask,therefore,whetheryouwouldbewillingtosendatrialdeliveryforsaleonD/Aterms.Ifthetrialsaleprovestocometobusinesssuccessfully,webelievethiswillpavethewayforfurtherorders.Ourproposalisamoderatewaytotestthemarketandhopeyoucantakeourrequestintoyourmostfavorableconsiderationandawaityourearlyreply.YourTruly,TextCRequestingforPaymentbyD/PDearSirs,WeareinreceiptofyourletterofAugust12th.HavingstudiedyoursuggestionforpaymentbyD/AfortrialorderofChineseTea,weregretthatweareunabletoentertainyourrequest.Asourpracticegoes,werequirepaymentbyconfirmedandirrevocableL/C.Thatistosay,atpresent,wecannotacceptD/Atermsinalltransactionwith

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