* Scope of International Financing
* Bills of Exchange
* Promissory Notes
* Negotiability of Bills and Notes
Negotiation and Transfer of Bills
SCOPE OF INTERNATIONAL FINANCING
1)The Financing of Foreign Trade: Involves the underwriting, paying and collecting of money for the purchase of goods and services.
2)Trade Documents: are used to facilitate the financing of foreign trade.
a. Bills of Lading: documents of title that represent the goods being traded (discussed in Lecture 10).
b. Bills of Exchange and Promissory Notes: documents used for transferring money from the buyer to the seller.
c. Letters of Credit: documents used to guarantee the seller's delivery of goods and the buyer's delivery of money.
BILLS OF EXCHANGE
Defined: A bill of exchange (or draft) is —
a. A written, dated and signed instrument.
b. Containing an unconditional order.
1) From drawer.
2) Directing drawee.
3) To pay a payee.
c. A definite sum of money.
d. With payment to be made.
4) On demand, or
5) At a specified future date.
1. Bills of Exchange are Negotiable Instruments
e. “Negotiable” means: the drawer cannot refuse to pay a proper holder because —
6) The underlying contract was improperly performed, or
7) The instrument was improperly entered into.
f. Importance: Bills of exchange are more readily salable and, therefore, useful financial tools.
1. Defined: A promissory note (or simply a “note”) is
a. A written promise.
b. To pay a determinate sum of money.
c. Made between two parties.
1) Maker: The issuer of a promissory note.
2) Payee: The person to whom the note is to be paid.
2. Difference Between a Promissory Note and a Bill of Exchange: The maker of a note promises to personally pay the payee rather than... [continues]
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