Unit 9 Instruments of International Settlements.pptVIP

Unit 9. Instruments of International Settlements In international trade practice, the buyer is obliged to make payment to the seller. The instruments (or bills) used for payment or transfer of money in international trade practice, including draft, promissory note, and check. I. Draft (Bill of Exchange) (汇票) A. The definition of the draft Definition-A bill of exchange (draft) is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a certain sum of money to the order of a specified person or to the bearer. B. 3 Parties of Draft A bill of exchange has three parties: the drawer, the drawee and the payee: The drawer is one who issues the bill of exchange, and he demands the drawee to pay a certain sum of money to the payee. He signs his name on the bill, and guarantees that the payer will pay the money or accept the bill upon the presentation of the draft. He draws the bill of exchange upon the drawee presumably because the drawee owns or is expected to pay him a certain sum of money. The drawee of the bill of exchange is required by the bill of exchange to pay a certain sum of money to the payee upon the presentation of the bill or, if the bill is a time bill, he is required to accept the bill and effect the payment at the maturity of the bill. The payee of the bill of exchange is the creditor of the bill of exchange. He is entitled to ask the drawee for the payment. If refused, he is entitled to have recourse to the drawer for the payment. The payee is generally the one that is listed on the bill. But for a negotiable bill, the payee listed on the bill may transfer the bill to someone else. He then becomes the prior endorser or transferor, when the man to whom the bill is transferred is the subsequent party. C. Types of drafts 1) Commercial bills and banker’s bill Commercial bill is drawn by