International Banking and Comercial Payment Essay

International Banking and Comercial Payment - Essay Example Direct export, export through an agent, or export by the establishment of branches and subsidiaries are ways in which firms export. 2 Risks of fraud, political risks, exchange risks and risks associated with recovering payment are but a few of the risks that confront exporters and importers. Thus, it is important to organise judiciously an export operation and to consider carefully international payment terms in an attempt to present smooth operations to minimise risks for exporters. 3 Although exporters may choose from open account, document collection, letter of credit or cash in advance as payment methods to optimise risks while ensuring that they give effect to an export transaction, it makes sense to exercise presale due diligence and to consider all risks carefully, including country specific risks. 4 It is possible for international trade transactions to present great dramas that may lead to disputes requiring expensive and time consuming dispute resolution procedures or expen sive litigation in courts of several countries. 5 The case presented in Appendix A, below, describes an interesting situation involving the unauthorised removal of a bill of lading included with the documents for a document collection export transaction presented by Wyevale Ltd, located in the UK for Asian Traders Inc., as buyers, located in the Philippines. The discussion presented below focuses on an analysis of the facts and the legal issues related to the previously mentioned case of Wyevale Ltd exporting to Asian Traders Inc. An Analysis of Facts of the Question The situation described in the case presented in Appendix A is a typical DA (Documents against Acceptance) collection procedure for export in which the buyer is required to indicate acceptance of bill of exchange prior to the Import Bank releasing title of the goods in the form of bill of lading to the buyer. 6 7 It is important to understand that making, altering, negotiating or transferring a bill of lading with the i ntent to defraud is a criminal offence. 8 However, the managing director of Asian Traders Inc. may have inadvertently left the Import Bank with the bill of lading on his person without realising this, and that he had then proceeded to take an opportunity to sell the goods consigned to his firm to a third party based on possession of the bill of lading. Because the exporter, Wyevale Ltd of the UK will have a record of the correspondence with Asian Traders, and the banks will have their testimony, it is not possible for the managing director of Asian Traders to escape litigation and simply walk away without paying the exporter because he has in his possession a bill of lading. 9 However, the Import Bank employee should have been more careful. In any case, the importer, Asian Traders Inc. has five days in which to effect payment. Because Asian Traders has the bill of lading, and it has sold the goods consigned to a third party, which has paid to Asian Traders Inc., there is no reason w hy Asian Traders should not pay in due course, unless an intention exists to deviate from acting in good faith. Even if a bill of lading has passed on to an importer, this will not mean that the importer is in a position to take physical delivery of goods because the ship on which the goods were consigned may not have arrived in port or released its cargo. 10 Thus, it will