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    Documentary Sale

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    anon_292350546
    1) A documentary sale involves the buyer paying upon presentation of negotiable documents of title like bills of lading by the seller. Risk transfers with the documents, though goods may remain with the carrier or warehouse. 2) Bills of lading are key documents in international trade, acting as receipts, contracts with carriers, and transferring ownership. They allow goods to be delivered by tendering the document and provide security to the holder. 3) In a documentary collection for payment against documents, the seller presents documents like bills of lading and drafts to their bank for collection from the buyer. This separates goods from payment and allows the holder to control the goods.

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    Documentary Sale

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    anon_292350546
    431 views23 pages
    1) A documentary sale involves the buyer paying upon presentation of negotiable documents of title like bills of lading by the seller. Risk transfers with the documents, though goods may remain with the carrier or warehouse. 2) Bills of lading are key documents in international trade, acting as receipts, contracts with carriers, and transferring ownership. They allow goods to be delivered by tendering the document and provide security to the holder. 3) In a documentary collection for payment against documents, the seller presents documents like bills of lading and drafts to their bank for collection from the buyer. This separates goods from payment and allows the holder to control the goods.

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    1) A documentary sale involves the buyer paying upon presentation of negotiable documents of title like bills of lading by the seller. Risk transfers with the documents, though goods may remain with the carrier or warehouse. 2) Bills of lading are key documents in international trade, acting as receipts, contracts with carriers, and transferring ownership. They allow goods to be delivered by tendering the document and provide security to the holder. 3) In a documentary collection for payment against documents, the seller presents documents like bills of lading and drafts to their bank for collection from the buyer. This separates goods from payment and allows the holder to control the goods.

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    Download as PPT, PDF, TXT or read online from Scribd
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    431 views23 pages

    Documentary Sale

    Uploaded by

    anon_292350546
    1) A documentary sale involves the buyer paying upon presentation of negotiable documents of title like bills of lading by the seller. Risk transfers with the documents, though goods may remain with the carrier or warehouse. 2) Bills of lading are key documents in international trade, acting as receipts, contracts with carriers, and transferring ownership. They allow goods to be delivered by tendering the document and provide security to the holder. 3) In a documentary collection for payment against documents, the seller presents documents like bills of lading and drafts to their bank for collection from the buyer. This separates goods from payment and allows the holder to control the goods.

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    Documentary Sale and INCOTERMS

    1
    2002 West Educational Publishing Company

    Contracts as a way to manage risk


    Negotiate terms Allocate risk: moving goods and money Fix performance obligation and responsibilities Fix price Make sure understanding is reflected in contract
    2

    Where is the the risk in an international transaction?


    Similar in domestic transaction Payment risk Delivery risk Quality risk

    Definition
    Documentary Sale:
    Buyer is required to pay upon presentation of NEGOTIABLE DOCUMENT OF TITLE by seller

    Document of title= evidences ownership


    e.g. dock receipts, warehouse receipts and bills of lading Ownership of goods passes with the documents, goods may stay with bailee
    4

    Definition
    Negotiability= legally transferred from one to another in return for value In the U.S. bills of lading governed by The Federal Bills of Lading Act and the Uniform Commercial Code. In India, it is governed by India carriage of Goods by Sea Act, 1925

    Bill of Lading
    A document of title issued by a carrier to a shipper upon receiving goods for transport Negotiable bills must be to order or to bearer (but bearer instruments not used in international transactions) Order instruments must be delivered and indorsed Carrier must deliver goods only to the holder of the bill of lading (otherwise liable for misdelivery)
    6

    Role of B/L
    B/L evolved from a receipt issued by a carrier upon shipment to a key document in international trade. Receipt = evidence of shipment Contract = tersms of contract with carrier Doct. Of title = key to the warehouse, constructive possession of goods
    Enables delivery of goods by tender of the doct. Provides security

    Documentary Collection: Payment against documents


    Separation of goods and documents facilitates trade Controlling documents means you control the goods

    Stages in Documentary Transaction


    Seller gives goods to carrier and gets bill of lading seller endorses bill of lading and gives to bank with other documents (insurance, certificate of origin, documentary draft)

    Documentary draft
    Facilitates payment Negotiable order to pay made out by seller Drawn on buyer, payable to the seller May be used with letters of credit

    10

    The Documentary Sale


    G
    Japanese Importer

    B A
    Sales Contract CIF Japanese Port Documents Against Payment

    American Exporter

    E
    Collecting Bank

    C F

    D C

    Exporters U.S. Bank (Remitting Bank)

    A. Sales contract calls for documentary sale B. Documents prepared - export license obtained - goods delivered to carrier C. Negotiable bill of lading, insurance policy, certificates of origin, invoice with draft attached presented to remitting bank D. Documents forwarded for collection through International banking system E. Documents presented for negotiation on payment F. Payment remitted and exporters account credited 11 G. Importer claims goods and makes entry

    Rights of Purchasers
    Special protection for purchasers who take by negotiation. They take free of any adverse claims. These are also called good-faith purchasers. Good faith purchaser is one who purchases
    for value (not to settle debt) in good faith and without notice of antecedent claim in the ordinary course of business

    Banque de Depots v. Ferroligas

    Types of Contracts: Shipment and Destination


    Shipment contract: CIF= cost, ins. and freight included in price; risk of loss passes when goods cross ships rail at port of shipment

    13

    Measurement of damages in CIF contract


    damages measured by the market price of the goods at the port of shipment on that date
    Basse v. Bank of Australia

    14

    Types of Ocean Bills of Lading


    Clean bills of lading Onboard bills of Lading Received for shipment bills of lading Straight bills of lading

    Other Types of Transport Documents


    Air Waybills Forwarders Bill of Lading Multimodal Transport Documents

    Risk of loss

    Shipment contractrisk passes when goods are given to the first carrier Presumption of shipment contract if not specified

    Destination contractrisk passes when goods are given to buyer at destination point

    17

    Risk of Loss under CISG


    Articles 66-70 If the contract calls for the goods to be handed to a carrier at a particular place, then the risk passes to a buyer at that place. However, if seller just has to ship, then risk passes to buyer when goods are handed to the first carrier.

    Trade Terms (INCOTERMS)


    Responsibilities of buyer and seller need to be negotiated. Trade terms can be used as a short hand for assigned responsibilities and allocating when the risk passes from one party to another A universally recognized set of definitions of international trade terms developed by the International Chamber of Commerce (ICC) in Paris, France First edition 1936

    Trade Terms (INCOTERMS) cont.,


    They determine
    The place/point of delivery of goods When the risk of loss/damage in transit is transferred The distribution of costs The responsibility regarding carriage , insurance, documentation

    INCOTERMS do not determine the transfer of property which depends on the agreement of the parties and on national law applicable to the contract .
    property is not intended to

    Basic concepts
    Presumption is a shipment contract Negotiate and price responsibilities accordingly You can have a destination contract but it will be expensive, but maybe worth it. They are becoming more common. Be explicit, reference clear set of terms St. Paul Guardian Ins. Co v Neuromed, GmbH Pestana v. Karinol
    22

    Web Sites
    http://www.forwarderlaw.com http://www.cisg.law.pace.edu http://www.iccwbo.org http://wwwjime.open.ac.uk/2004/16/demo/Incoterms/i ndex.htm

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