Beruflich Dokumente
Kultur Dokumente
Conf. Univ. Dr. Violeta Negrea
I. CROSS CULTURAL NEGOTIATIONS
Objectives:
I. Answer the following questions before reading the text:
1.What is to negotiate?
2. What sort of character features should a negotiator have?
3. Are these features a natural endowment only or they can be educated?
II. Answer the following questions after having read the text:
1. When do we have to negotiate?
2. What is a conflict?
3. How do you think that a conflict can stimulate creativity and
motivation?
4. Developing negotiation skills is not changing character features?
"Every desire that demands satisfaction and every need to be met is at
least potentially an occasion for negotiation; whenever people exchange ideas
with the intention of changing relationship, whenever they confer for agreement,
they are negotiating".
(Lax. D. A. and J. K. Sebenius, The Manager as a Negotiator)
We are involved all the time in situations that need to be dealt with
negotiation: at work, at home, when recreating. A conflict is one in which there
are opposite interests, and both sides prefer to search for solutions, rather than
giving in or breakingoff contact. Few of us enjoy dealing with conflicts with
either bosses, peers, subordinates, friends, or strangers. This is particularly when
the conflict becomes hostile and when strong feelings become involved. Resolving
conflict can be mentally exhausting and emotionally draining.
It is important to understand that a conflict that requires solutions has its
positive and negative outcomes. It is not always destructive, but can play a
productive role not only for one party but also for the relationship itself.
Important is to know how to manage a conflict not to escalate it out of control.
Conflicts should be used as a critical aspect of creativity and motivation. Studies
have shown that negotiation skills are significant determinants of a career
success. While negotiation is an art form to some extent, anyone can learn some
specific techniques. Learning these techniques and developing skills will be a
critical component of a successful career.
III. Match the following words with the gaps in the text: 1. alternative; 2.
responses; 3. process; 4. negotiators; 5. shift; 6. relationship; 7. option.
Responding to conflict
IV. Read the following text and draw out the main ideas:
Before the event, it is helpful to plan your negotiation. State whether you
are in a winwin position or winlose one. Make sure of your goals, positions, and
interests. Figure out the best resolution you can expect, what is a fair and
reasonable deal, and what is a minimally acceptable deal. What information do
you have and what more do you need. What are your competitive advantages
and disadvantages? What are the other's advantages and disadvantages? Give
some thought to your strategy. Be clear about your real goals and real issues and
try to figure out the other person's real goals and issues. Negotiations fail
because people are so worried about being taken advantage of that they forget
their needs. People who lose track of their goals will break off negotiations even if
they have achieved their needs because they become more concerned with
whether the other side "won". Equally important is to be clear and communicate
why your goals, issues, and objectives are important to you. The other side needs
to know why issues are important to you, not just that they are important.
It is important to be clear about your walkway (also called reservation
position), and your competitive advantage your strongest points. You need to
know the advantages to the argument. Similarly, know your weakness and the
other's weaknesses. In most conflicts resolution or negotiation situations you will
have a continuing relationship with the other person so it is important to leave
the situation with both sides feeling they have "won". It is very important that the
other person does not feel that he or she "lost". When the other person loses, the
results are often lack of commitment to the agreement or even worse, retaliation.
The most common failure is the failure of negotiation parties to recognize the
integrative potential in a negotiating problem; beneath hardened positions are
often common or shared interests.
V. Identify the following types of negotiators:
1. the aggressive; 2. the long pauser; 3. the mocking negotiator; 4. the
interrogator; 5. the cloak of reasonableness; 6. divide and conquer; 7.
the "act dumb" negotiator.
a) mock and sneer your opposition's proposals to get the other side so upset that
they will say something they may regret later;
b) the type who unsettles the other side by making cutting remarks about their
previous performance, unreasonableness, or anything that can imply the
opponent is worth little;
c) produce dissension among opposition so they have to pay more attention to
their own internal disagreements rather than the disagreements with the
opposition; ally with one member of the team and try to play him or her off
against the other members of the team;
d) appear to be reasonable while making impossible demands for the purpose of
winning the friendship and confidence of the others;
e) listen to the other side but don't answer immediately; appear to give it
considerable thought with long silences, hoping the silence will get the other side
to reveal information you need;
f) meet all proposals with searching questions that will imply the opponents
haven't done their homework; challenge any answers in a confronting manner
and ask the opposition to explain further what they mean;
g) pretend to be particularly tense and by doing so exasperate the opposition in
hopes that at least one member of the opposing team will reveal information as
he tries to find increasingly simple ways to describe proposals with each proposal
being elaborated and amplified so any one can understand it.
VI. Read the text and answer the questions:
1. What is a "recognizable behavior" of the people of a country?
2. How do cultural variables manifest on a national level?
3. What influence has the level of personal education and attitude
towards cultural communication in business negotiations?
4. What is the role of verbal and nonverbal communication in
intercultural behavior for business?
Romania Other country
1. Who are the country's national heroes and heroines?
2. What is the attitude towards gambling, drinking, drugs, religion,
education?
3. What things are taboos in this society?
4. Which colors are positive in tone? Which ones are negative?
5. What are the special privileges of age and/or sex?
6. What are the important holidays? How is each of them observed?
7. What sports are popular?
8. What is the normal work schedule? How does it accommodate to
environmental or other conditions?
9. How will your financial position and living conditions compare with
those of the majority of people living in this country?
10. What is the history of the relationship between your country and the
host country?
11. Where are the important universities of the country? If university
education is sought abroad, to what countries and universities do
students go?
VIII. Appoint several teams within the class. Each team has the
responsibility of selecting a single country and then orally reporting to
the class some of that country's national environmental variables that
may affect business and communication. A possible outline might include
the following points:
The country The people of the country
Land and climate Population
History and government Language
Economy Religion
Education Holidays
Transportation Attitudes
Health
IX. Work in groups of four or five. Each member group will represent a
department of an imaginary company concerned for a new investment
project in a foreign country you chose previously. The president will call
for a meeting of these departments to have oral presentations about the
new project. Draft a minute of the meeting.
X.
a) What would you do about the bill for dinner? Discuss in groups.
b) Imagine a similar situation and find its solution.
A young American invited to dinner four couples two American, and two
Japanese who had previously had him for dinner at their homes. Because he
was a poor cook, he decided to entertain them at a restaurant instead of at his
house. He made it clear that the invitation was to compensate for his inadequate
cooking skills, but he did not explicitly mention his intention to pay for the
restaurant meal, which he felt was implied by the invitation itself.
When the waiter presented him the bill, all the friends asked the amount of
their share. After a few rounds of insistence by both sides, the American friends
conceded and thanked the young man for the meal.
The Japanese friends, however, did not stop. They tried to press money
upon their host, acted as if they did not understand, and protested that their
wives would disapprove of them if they did not succeeded in paying. The young
man felt he could not accept their money, because it would embarrass the
American friends who had let him pay. The Japanese friends were insistent, and
began to talk together in Japanese, a rarity in front of nonspeakers. The young
man was very distressed, because the objective of the dinner was to thank his
friends, not to upset them.
What would you have done to extricate all parties from this discomforting
situation?
XI. Translate into English:
a. Negociatorii englezi reprezinta o categorie aparte, fiind recunoscuti drept cei
mai abili, dar nu in sensul de a jongla in arta viclesugului. Pregatiti in institutii
specifice, care imbina diplomatia, psihanaliza, cu arta dialogului si a businessului,
britanicii au o clasa inalta. Negociaza numai pe baza unor date concrete,
semneaza dupa o matura chibzuinta si pe baza unor analize complete ale ofertei
si se tin de cuvant asupra celor convenite. Vin pregatiti cu fise de caracterizare
ale partenerilor si detin informatii la zi despre potentialul partenerilor si produsele
sau serviciile care urmeaza a fi negociate. Au scheme de negociere pregatite in
prealabil, astfel incat inspiratia de moment joaca un rol minor. Echipa de
negociatori nu este schimbata pe parcursul tratativelor, iar intre membrii acesteia
exista o adevarata comunicare spirituala.
b. Negociatorii germani sunt condusi de deviza "un om, un cuvant", dand dovada
de corectitudine in absolut orice imprejurare. Sunt seriosi, calmi, siguri de ei, buni
profesionisti, punctuali, exacti in tot ceea ce intreprind sau vorbesc. Au o educatie
aleasa, sunt protocolari, politicosi si meticulosi chiar daca uneori, prin
superioritatea lor, dau impresia de exces de patriotism specific. Se straduiesc sa
obtina cele mai bune conditii, dar lasa si partenerului "portite" de castig. Cei mai
perseverenti dintre ei chiar se transpun in mentalitatea partenerului, daca acest
lucru este necesar pentru atingerea scopului propus.
c. Spaniolii si portughezii seamana mult cu romanii prin sorgintea latina comuna.
Sunt calzi, prietenosi, ospitalieri, si apreciaza partenerii care se intereseaza de
cultura, istoria, si modul lor de viata. De fapt, similitudinea cu italienii este
recunoscuta. Ritmul derularii tranzactiilor este destul de lent, iar amanarea este
deseori un subterfugiu agreat pentru mentinerea temporara a stadiului discutiilor
pe standby. Prefera negocierile directe, dar ocazionate de intalniri protocolare,
neoficiale si "in spatele cortinei". Inainte de negocierile propriuzise, la care
intarzie adesea, in ciuda pretentiilor disimulate ca partenerii sa fie punctuali
aloca o parte din timp cunoasterii interlocutorilor, avand o putere de introspectie
deosebita. Formal in primele runde de tratative, treptat, recurg la elemente de
ordin emotional. Mai mult, cand nici nu te astepti, manifesta o politete exagerata,
vecina cu lingusirea, ceea ce creeaza o stare euforica si "iti fura" din timp.
d. Negocierile cu parteneri rusi sunt de regula dificile, obositoare, dureaza mai
mult decat cu organizatii sau companii similare din Europa Occidentala sau SUA.
Impresia vechilor negocieri "tovarasesti" persista, desi ambele tabere cauta sa nu
o arate. Costul negocierilor este mai ridicat din cauza perioadei lungi de semnare
a contractelor. De obicei, deoarece autoritatile sunt mai birocratice si lipsite de
flexibilitate, prefera parteneri cunoscuti. Negociatorii esteuropeni sunt extrem de
precauti, deoarece sunt in joc de obicei banii firmelor de stat si orice eroare poate
duce la pierderea serviciului pe care il au. Relatiile personale bune joaca un rol
major in eficientizarea temporala si de substanta a afacerii. Din cauza saraciei in
devize convertibile, se incearca plata cu produse, fie partial, fie total si compania
care accepta barterul isi sporeste sansele de reusita.
e. Negociatorii chinezi nu suporta partenerii tineri. Ei nu accepta sa intre in
negociere daca, din start, pretul solicitat nu este redus pana la nivelul considerat
de ei ca rezonabil sau daca nu li se argumenteaza convingator justetea pretului
solicitat. Sunt niste gazde excelente. Au inceput sa aprecieze complimentele, dar
manifesta inca reticenta fata de partenerii tineri sau de sex feminin. Se prezinta
cu echipa de negociere supradimensionata si adeseori, isi schimba echipa partial
sau total. Au mania de a inocula, in derularea discutiilor, asertiuni legate de
relatiile politice, asa ca tratativele sunt de multe ori anevoioase. Nu se grabesc
niciodata. Echipele cu care se prezinta la masa discutiilor au in componenta lor
multi specialisti care intreaba tot timpul cate ceva, sporind stresul partenerilor. In
acest fel esti obligat sa raspunzi minute in sir la un tir de intrebari (legate mai
mult sau mai putin de obiectivul negocierii), fiind permanent intrun fel de
defensiva care creeaza o senzatie de oboseala fizica si psihica.
f) 7 tehnici verificate pentru ratarea unei negocieri
1. Improvizati totul. In nici un caz nu va osteniti sa stabiliti dinainte ce
negociati. Mai ales feritiva sa delimitati cu precizie obiectul negocierii (o clauza,
un pret, un termen, o garantie, etc)
2. Straduitiva sa torpilati disponibilitatea celuilalt. De la inceput, reprimati
va orice incercare de a obtine vreo umbra de intelegere, de respect, siguranta,
control. Tratatil conform prezumtiei de rea credinta. Nu luati in serios ideea de
negociere, pentru ca acomodarea reciproca a intereselor este o utopie. Rezumati
va, cel mult, la a va targui, adica la a schimba un lucru cu altul.
3. Cultivati adversitatea. Subliniati tot timpul diferentele si nu cedati ispitei
de a admite ca ati putea avea si vreun scop comun. Incepeti fiecare fraza cu
“eu…” si scoatetil pe “noi, impreuna…” din vocabularul dvs. Ideal ar fi sa va
certati.
4. Grabitiva sa enuntati primul oferta. Mai mult, facetio in termen
categorici, pentru a nu va lasa nici o portita de scapare. Astfel, veti fi tot timpul
cu spatele la zid, veti avea motive sa fiti peste masura de nervos si, de ce nu, veti
suspenda discutiile.
5. Tratati de pe pozitia celui care nare de ales. De pilda, aruncati toate
resursele umane in joc, incepand negocierea de la nivelul patronului, cu toata
echipa de consilieri alaturi, pentru a va priva de posibilitatea de a va replia, la un
moment dat, sub pretextul consultarii cu unul dintre experti. In general, avand
mereu o alternativa, vati simti prea relaxat, prea bine, prea avantajat.
6. Formulati o oferta minimala. Are sens oare, sa cereti mai mult decat puteti
obtine? Daca interlocutorul accepta? In plus, ati dispune de un spatiu prea mare
de manevra, ceea ce ar putea sa va plictiseasca.
7. Fiti crispat, grav, crancen. Daca aveti simtul umorului, uitati de el. Ar
putea sa va puna in pericol esecul.
II. BANKING CONVENTIONS
Objectives:
students will become familiarized with terminology and documents specific to
the bank conventions
loans, overdraft, letter of credit
reading, writing and form filling skills
A. Credit Facility Convention
I. Answer the following questions:
1. What is the difference between overdraft and loan bank facility?
2. When do the customers use each of them?
II. Read the text and find its key words. Then answer the questions:
In order to execute a loan, banks need paidin capital that is earned from
financial activities, borrowed funds, and from customers' deposits. The source for
lending is always the money deposited with the bank by the bank's customers,
whether in a demand or time account. This will always limit considerations in the
degree of risk that the commercial bank will take. It cannot jeopardize the safety
of the depositors. The domestic and the international bank will always obtain
certain basic information that usually is forthcoming in a meeting with the
potential borrower. It will learn how much money is being sought, the purpose of
the loan, how long it is needed for, and how it will be repaid.
Banks make loans for worthwhile purposes: financing trade, expanding
businesses, house building, and so on. They need evaluate the three C's of credit:
character, capacity, and capital. That is the integrity of the borrower, his capacity
to repay the loan, and the soundness of his financial position.
Sometime the loan applicant's ability to repay the loan is pendant on the
purpose of the loan itself. Loans can be selfliquidation, when the source of
repayment is from the sale of imported merchandise, or capitalexpansion, when
the source of repayment is from increased sales.
The financial statement of the borrower represents the financial position of
the borrower and it usually consists of a detailed balance sheet and a profit and
loss account statement. An audited financial statement requested by the credit
officer will cover a certain period of the customer's activity.
In international banking activity, the credit officer will consider the
economic and political outlook of the foreign country before loaning money to a
foreign borrower, its balance of payments being an important source of
information. The bank's prior experience with the borrower and the nature of his
business represents a subjective factor in the decisiontaking process. When the
loan is granted, the bank will also decide upon the interest rate to charge. That
will depend on the cost of money to the bank. This includes the average interest
rate the bank is paying to its depositors, the bank's operating costs, the return
that the bank expects. The bank must also take into account possible losses and
provide dividends to the bank's shareholders.
There are also other considerations to take into account when a bank
decides to allow a loan. If it is about a term loan, that is a second rate borrowing,
the risk is greater and it must be compensated through a higher interest rate
against the primerate borrowings that are shortterm loans.
The appropriate credit instrument is to be decided upon for the repayment of the
loan too. The promissory note is the most customary that can be payable "on
demand" of the bank. The banker's acceptance can be used for loans involving
international trade. It is saleable to investors so that the bank merely commits
itself to pay on maturity. The bank does not have to commit its own funds. Credit
extension may involve advances, discounting of accounts receivable, overdrafts,
or advances against collections. A loan can be secured by collateral assigned to
the bank, such as securities or precious metals, or guaranteed. When an
agreement is reached, the borrower signs the necessary documents and the
amounts are disbursed to him.
For large loans, banks often form a syndicate each of them disbursing a
portion of the loan. One bank puts the deal together and carries the
administrative burden during the life of the loan, being the "lead bank". A
syndicate is sometimes desirable because of the legal lending limits on banks, the
general relationship of the total demand for credit compared to the supply of
loanable funds, or the prudent banker's desire to spread the risk.
1. What are loans used for?
2. Explain the three C's of a credit.
3. What is the way to determine the interest on a loan?
4. What is the difference between an unsecured loan or a loan secured
with collateral? Why does a guarantee not represent security?
5. What is a promissory note for a loan?
6. What are the resources for loanable funds?
7. Enumerate the reasons to evaluate the risks for a loan.
8. Is it overdraft considered a loan?
9. What is the difference between a selfliquidating loan and a capital
expansion loan?
10. Why is a financial statement required for a bank to allow a credit?
11. What can be determined from the balance sheet when a loan is
applied for?
12. Is it necessary to consider the risk of a foreign borrower?
III. 1. Suppose you are a bank credit officer. A customer from Slovenia
requests a loan for his company. List ten questions to ask him in your
loan interview.
2. After having approved his loan request, list five factors to consider in
calculating the interest rate for the loan.
3. If the loan is for five years, what should you look for in Slovenia's
balance of payments?
IV. Fill in the blanks using the following words:
1. installments; 2. security; 3. amount; 4. money; 5. paid; 6. statement;
7. agreement; 8. default.
When a person borrows a) ____________ or sells goods on credit, the
lender wants a guarantee to cover the loan. If the borrower does not pay back
the borrowed b) ___________, the lender may sell the goods which were given
to him as a guarantee and may also use the guarantee amount in order to cover
the loan. Such a contract is called a "loan c) __________". On the basis of this
contract, the borrower obliges himself to pay back the loan at a certain date, or in
several equal d) _____________ at periods established throughout a month or a
year. If the borrower does not pay back at required date, makes any false e)
_____________ to lender, dies, becomes insolvent or terminates his business by
all reason, the payment of the loan is "accelerated" and the borrower or his
successors must pay immediately the whole amount which remained unpaid.
When a loan f) ____________ is drawn up, the identity of the parts, the total
amount of the loan, the interest rate and the date the loan that must be paid
back will be taken into consideration. The contract will stipulate the description of
the goods which secures the loan, and the date on which the installment is to be
g) __________ back. It will also mention the lender's obligation not to sell or
destroy the good and the right of the lender in case of the borrower's h)
___________ on his obligations.
V. Identify the main parts the following Credit Facility Contract and
translate them into Romanian:
a) the preamble of the contract (name of the contractual parties, their
address, fiscal code, represented by); b) the object of the contract; c) the
body of the contract (clauses of the contract), d) signatures of the two
parties.
CREDIT FACILITY CONTRACT
___________/____________
Made by and between:
1. (name of the bank) branch ____________ having its premises in
___________ hereinafter called ______ the “BANK” represented by
(manager/deputy) _____________ and by Head of Department as “CREDITOR”
______________ and
2. __________________________________________ having its premises in
_______________________registered at _______________under the number
____________, fiscal code ____________ , hereinafter called the “CLIENT”,
represented by _____________ President/Administrator/ General
Manager/Manager and by ____________ President/Administrator//Manager/
Financial Manager as BORROWER,
3. ______________ having the premises/domiciled in ________ registered at
_________ under number _________ ,fiscal code ________, identified with
ID/Passport series no issued by _____________ on __________ hereinafter
called “CLIENTCODEBTOR/GUARANTOR”, represented by ____________
(position/owner/usufruct beneficiary), as __________ (borrower/fidejusore
guarantor), jointly and indivisible obliged toward the BANK the following
CONTRACT has been signed.
ARTICLE 1
The Bank will grant the Client a loan or an overdraft facility hereinafter
called “FACILITY”, under the following conditions:
Value:__________
Validity:_________
Object: the FACILITY will be exclusively used for: _________
1. Included in the Accounts plan of banking companies:
one withdrawal
several withdrawals (as scheduled bellow or in the annex)
1.1. Reimbursement of the facility will be made
one installment
several installments (as scheduled below or in the annex)
ARTICLE 2. Pricing and payment conditions
In carrying out the present Contract, the Client/s owe(s) and will pay the Bank
the following costs:
2.1. Base interest and margin
2.1.1. Base interest rate is _________ % p.a., periodically revised by the
Bank for the entire period of the present Contract___________ , until full
reimbursement of the debts toward the Bank.
2.1.2. Risk margin is ____% p.a.
2.2. Flat fees in the amount of ______ and will be paid by the Client when signing
the contract.
2.3. Payment conditions
2.3.1. The Client is obliged to provide in the current account, in the
currency withdrawals made, the amounts necessary to cover the debts (principal,
interest and other costs, etc) maturing according to the provisions of the present
Contract, and authorizes the Bank to debit the current account with these
amounts.
2.3.2. The Bank is not liable for any debt caused by the nonexistence of
funds in the Client's current account since crediting the account is entirely the
Client's obligation.
2.3.3. In case of default payment, the Client/Guarantor will pay the delay
penalties calculated to the total amount of the debt with priority toward any other
debt of the Client/Guarantor, other than those arisen from the present Contract.
2.3.4. In the case of default of payment, the Bank will sue and execute the
Client/Guarantor in order to achieve full repayment of the debit.
ARTICLE 3. Securities
3.1. The Client, Codebtors and Guarantors undertake jointly and solidarily to
meet all the obligations arisen from the present Contract and for securing the
facility, undertakes to provide to the Bank the following securities:
3.1.1. Mortgage on the building/usufruct on the building located in
_____________________________________ property of ____________ as in
conformity with _____________________.
3.1.2. Pledge on business asset owned by __________________ used by
_____________________.
3.1.3. Personal guarantee of _______________ who understands to waive to the
benefits of discussion and division and understands to constitute as bail:
Deposit in the amount of __________ in the account no __________ opened
with ___________ .
Mortgage constituted
Pledge
on all his present and future assets
Endorsement of commercial papers issued by ________ in favor of
___________.
Claims arisen from ___________
contracts
shares
share of capital
drafts/promissory notes
invoices
others
3.2. In guarantee and payment, the Client issues a promissory note "in blank" as
for a amount and maturity are concerned and authorizes the bank to fill it in at
maturity or at any time, in case of a Client's and /or Guarantor's default, with the
amount representing the entire debt (principal, interest, margin, increased
margin and other banking fees) plus the expenses for preserving and execution
for the goods, other costs and related delay penalties, as the case may be, as
resulting from the present Contract and future Additional documents in force at
the date of calling.
3.3. The Client/Guarantor concede the Bank's right to choose the way of sue and
execute the collateral and the order of their execution in case of default payment
or anytime in case of other Client's default by calling the facility before the term
stipulated.
ARTICLE 4. INSURANCE
5.1. The present Contract is a direct and unconditioned obligation of the Client/
Guarantor and will be considered at least equal with to the commitments
undertaken so far and with preferential rank toward the future commitments
which will be undertaken.
5.2. The Client/Guarantor is obliged towards the Bank:
5.2.1 To comply with the laws and regulations in force or with those that may
enter into force during the duration of the present Contract and whose non
compliance can directly affect its good performance.
5.2.2. To inform the Bank about all direct and indirect amendments to bylaws,
legal status, resolutions regarding the changes in the management of the
company, before their entering into force, and the Bank has the obligation not to
oppose if these changes do not damage its interests.
5.2.3. To present to the Bank the balance sheet and the profit and loss account
right after their submittal to the fiscal authorities or any time upon the Bank's
request.
5.2.4. To declare to the Bank any other loans and facilities taken from other
banks or financial institutions in the country or abroad.
ARTICLE 6. DEFAULT CLAUSE
6.1. Default clause is established according to law.
6.2.1. Failure to pay any debt and/or nonfulfillment of any obligation of the
Client(s)/Guarantor(s) towards the Bank, stated under the terms and conditions
of the present Contract.
6.2.2. Submittal by the Client/Guarantor of documents and/or incomplete or false
information and/or omission of communicating the Bank documents and/or
information with the purpose of misleading the Bank;
6.2.3. The use of any other amounts and/or rights assigned in favor of the Bank
in purposes other than covering the outstanding debts toward the
6.2.4. Alienating the guarantees or collateral securing the facility, for the purpose
of avoiding execution, as well as diminishing the value of the pledged business
assets by selling them, and/or by not preserving their value or by replacing them
with other similar goods having lower technical characteristics, larger wear and
tear.
6.2.5. Failing to insure the goods constituted as collateral under the terms of the
Contract.
6.2.6. Mortgaging, pledging or assignment in favor of third parties, the goods and
claims constituted as guarantees for the facility granted by the Bank through the
present contract, without the written consent of the Bank.
6.2.7. Denigration of the Bank in any way.
6.2.8. When any of the above mentioned default cases occur, or anytime default
of the Client/Guarantor appears, the Bank may declare callable (as due) all
obligations arisen from the present Contract and will immediately debit any or all
accounts of the Client/Guarantor of the Bank.
6.2.9. In all default cases, the Client is and will remain directly liable for all direct
and indirect financial consequences due to the prior eligibility of the claim, owing
the Bank all costs and expenses related to the immediate execution.
ARTICLE 7. OTHER CLAUSES
7.1. The present contract and the accounts statements mentioning the debts of
the Client/Guarantor towards the Bank related to the facility, are wrist of
execution by law will and without compliance with any other formalities. Any
other contract and/or commercial papers etc invested with executory title are
acknowledged as valid by the Client/Guarantor, who undertakes not to act against
the full recovery of the debt by the Bank while they cannot oppose the Bank the
exceptions of: payment of the due thing, enrichment without just cause, absolute
voidness, false information.
ARTICLE 8. JURISDICTION
The parties undertake to assure and keep the confidentiality of the
conditions of the present Contract.
8.1. Any misunderstanding arising between the parties concerning the present
Contract shall be settled on amiable basis, otherwise the parties agree for final
settlement through the parties agree for final settlement through arbitration, the
authority being to the Court of Arbitration of the Chamber of Commerce which will
settle the case in compliance with the own Procedure Rules.
ARTICLE 9. CONFIDENTIALITY
The parties undertake to assure and keep the confidentiality of the
conditions of the present Contract
ARTICLE 10. ENTERING INTO FORCE
10.1. The present Contract enters into force on _________, but any withdrawal
may be effected only after/while constitution and receiving by the Bank of the
documents regarding guarantees, drafted and registered in accordance with the
legal procedures, the banking rules and the present Contract.
10.2. The present Contract is drafted in __ (________) originals, one for each
party, all having the same validity for the contractual parties.
Signature, Signature
(bank) (borrower)
VI. Translate into English:
A.
Contractul este un acord, o intelegere intre doua sau mai multe parti
contractante, sub forma scrisa sau verbala. De obicei, pentru aceste contracte
societatile, institutiile, organizatiile au pregatite contracte tip pe care le
completeaza atunci cand este nevoie. Unele clauze, cu variatii nesemnificative de
continut, se gasesc in toate tipurile de contracte, cum ar fi: obiectul contractului,
notificari, forta majora, cesiunea, incetarea contractului. Conventiile scrise permit
partilor sasi determine clar obligatiile si drepturile partilor. Daca acestea nu pot
ajunge la consens deplin in ceea ce priveste fiecare termen in contract, aceasta
nu trebuie sa impiedice semnarea contractului totusi atunci cand majoritatea
conditiilor au fost indeplinite si tranzactia este destul de importanta.
Orice notificare/comunicare ulterioara semnarii contractului devine valabila
pentru intelegerea intre parti numai daca va fi transmisa prin scrisoare, fax sau
telex confirmat. Aceleasi comunicari nu pot deveni parte integranta din contract
daca ele nu capata o forma scrisa si confirmata de catre cealalta parte
contractanta.
B.
Cand o persoana imprumuta o suma de bani sau vinde marfuri pe credit,
este necesara incheierea unui contract de garantie care sa asigure restituirea
imprumutului. Acesta se numeste «contract de garantie» (Security and Loan
Agreement). Conform acestei conventii, imprumutatul se obliga sa restituie
imprumutul la o anumita data sau in transe pe un anumit interval de timp
specificat. Un astfel de contract va contine urmatoarele elemente:
prezentarea partilor, suma imprumutata, rata dobanzii si data la care
trebuie restituit imprumutul.
prezentarea bunului care garanteaza imprumutul
specificarea datelor la care se vor restitui transele sumei imprumutate
obligatia imprumutatorului de a nu deteriora sau instraina bunul folosit
drept garantie
drepturile imprumutatorului in cazul in care imprumutatul nu isi
indeplineste obligatiile
drepturile imprumutatului in cazul in care imprumutatorul detorioreaza sau
instraineaza bunul cu care se garanteaza imprumutul
B. Documentary credit
I. Answer the following questions:
1. What are the payment and credit instruments used in international
foreign trade?
2. Name advantages and disadvantages of using banking payment
instruments.
II. Read the text. Fill in the blanks with the following words:
1. merchandise; 2. draft; 3. convention; 4. instrument; 5. protection; 6.
shipment; 7. payment; 8. buyer; 9. documents; 10. application; 11.
goods; 12. requirements; 13. letter of credit.
The letter of credit, the most widely used a) _________ of international
banking, has had a long history as a means of facilitating international trade. It
assures the person selling the merchandise of b) __________ if he makes the
agreedupon shipment. It also assures the buyer not to pay until the seller ships
the goods. The letter of credit provides mutual c) _________ in dealing with each
other. Having settled the international trade d) _________, the buyer and the
seller can arrange payment through documentary credit. The buyer requests his
bank to issue a credit letter in favor of the seller by which it undertakes to pay
the seller when he will submit certain documents evidencing that he has made
the agreedupon e) __________ The letter of credit specifies the documents to
be submitted, the shipping f) ________ and the expiration date. The seller then
prepares the documents, ships the goods and draws a g) ________ attached to
the documents to be presented to the bank for payment. A typical letter of credit
may call for the following h) _________: invoice, bill of lading, marine insurance,
packing list, a weigh list, an inspection certificate, a certificate of origin. The
issuing bank, dealing only in documents, examines the draft and documents upon
receipt, to ensure that the documents conform to the i) ___________. The bank
has no legal obligation to inspect the actual j) __________. Once the documents
are verified, the bank pays the sight draft presented by the seller and then
notifies its customer, the buyer, that the documents have been successfully
negotiated and that he must pay the bank in accordance with his k)
____________. When the payment has been completed, the bank releases the
documents to the l). _________. The buyer has now the bill of lading which he
can present to the shipping company to receive his m) __________.
III. Read the following text and answer the questions:
1. What is a Documentary Credit?
2. What is its role in foreign trade?
3. How many contractual arrangements back the convention of the
Documentary Credit?
4. What are the main parties to the Documentary Credit?
5. Explain the advantages of Documentary Credit.
IV. Explain in your own words the operational mechanism of the
Documentary Credit figured in the image below:
S elle r Buy e r
C o n t ra ct
D o cu m e n t a ry cre d it
a p p lica t io n
A d vice o f
d o cu m e n t a ry cre d it
D o cu m e n t a ry cr e d it
V. Fill in the blanks: a) acting; b) assume; c) commitment; d) banks; e)
forwards; f) country; g) consideration; h) authorized; i) undertake.
There are usually two 1) __________ involved in a Documentary Credit
operation. The Issuing Bank is the bank 2) _________ for and on behalf of the
buyer. The Advising Bank is a bank chosen to advise the Documentary Credit to
the Beneficiary and is usually located in the seller's 3) ___________.
This second bank can be simply an Advising Bank, or it can also 4)
___________ the more important role of a Confirming Bank. In either case, the
Advising Bank can 5) __________ the transmission of the Documentary Credit. If
the second bank is simply "advising the Credit" without any obligation on its part,
it will mention this fact when it 6) ____________ the Documentary Credit to the
Seller (Beneficiary). Such a bank is under no 7) ____________ to make
payment, incur a deferred payment undertaking, accept Drafts or negotiate, even
though it may be nominated in the Documentary Credit as the Bank authorized to
pay, to accept, or to negotiate.
If the Advising Bank has been 8) ____________ or requested by the
Issuing Bank to add its confirmation and it is prepared to do so, it will state
accordingly on its advice to the Beneficiary. This means that the Confirming Bank
will conclude a separate banking contract with the beneficiary, and regardless of
any other 9) ____________, must pay, accept or negotiate without recourse to
the Beneficiary.
VI. Match the definitions with the types of Documentary Credits: 1.
Irrevocable Documentary Credit; 2. Revocable Documentary Credit; 3.
Revolving Documentary Credit; 4. Red Clause Documentary Credit; 5.
Standby Documentary Credit; 6. Transferable Documentary Credit; 7.
BacktoBack Documentary Credit.
a) In the case of a Documentary Credit that revolves in relation to time, e.g.
which is initially available for up to $15,000 per month during a fixed period of
time, say, six months, the Documentary Credit is automatically available for
$15,000 each month, irrespective of whether any sum was drawn during the
previous month. Under its terms and conditions thereof, the amount is renewed
or reinstated without specific amendments to the Documentary Credit being
required.
b) It gives the Beneficiary greater assurance of payment as it constitutes a
definite undertaking of the Issuing Bank, provided that the stipulated documents
are presented to the Nominated Bank or to the Issuing Bank and that the terms
and conditions of the Documentary Credit are complied with, to pay, accept drafts
and/or document(s) presented under the Documentary Credit. It cannot be
cancelled or modified without the express consent of the Issuing Bank, the
Confirming Bank (if any) and of the Beneficiary.
c) It has a special condition incorporated into it that authorizes the Confirming
Bank or any other Nominated Bank to make advances to the Beneficiary before
presentation of the documents. This condition/clause is introduced at the specific
request of the applicant and the wording is dependent upon his requirements.
This clause was originally written in red ink to draw attention to its unique nature
as it specifies the amount of the advance authorized. This type of Documentary
Credit is often used as a method of providing the seller with funds prior to
shipment. Therefore, it is of value to intermediaries and dealers in areas of
commerce that require a form of prefinancing and when a buyer would be willing
to make special concession of this nature.
d) It involves risks to the Beneficiary since the Documentary Credit may be
amended or cancelled while the goods are in transit and before the documents
are presented, or, although documents may have been presented, before
payment has been made, or, in the case of a deferred payment Documentary
Credit, before documents have been taken up. The seller then faces the problem
of obtaining payment directly from the buyer. It is used between affiliated parties
or subsidiary companies, or as a usage of a particular trade, or as a substitute for
a promise to pay or a payment order.
e) It is a Credit under which the Beneficiary (First Beneficiary) may request the
bank authorized to pay, incur a deferred payment undertaking, accept or
negotiate (the Transferring Bank), or in the event of a freely negotiable Credit,
the bank specifically authorized in the Credit as a Transferring Bank to make the
Documentary Credit available in whole or in part to one or more other Beneficiary
(ies) (Second Beneficiary (ies)). There may be occasions where the
Documentary Credit may be transferred even though it is not authorized by the
Documentary Credit regulations; for instance, when the beneficiary has gone into
bankruptcy or insolvency, when there are liquidators of the company, when there
are corporate reorganizations, etc.
f) The benefit of an irrevocable Documentary Credit may be available to a third
party where the Primary Beneficiary uses the Documentary Credit a
security/collateral to obtain another Documentary Credit (the Secondary Credit)
in favor of the actual supplier. It involves two separate Documentary Credits: one
opened in favor of the first or Primary Beneficiary and another one opened for the
account of the first/Primary Beneficiary in favor of a Second Beneficiary who is
supplying the goods. The First/Primary Beneficiary of the first Documentary Credit
becomes the applicant for the second Documentary Credit. Under this
arrangement, the Beneficiary or the Secondary Credit obtains greater protection
than he would under an assignment of proceeds.
g) It serves as a backup or secondary means of payment though it is recognized
as a primary obligation of the Issuing Bank. In both types of usage, the
underlying purpose of the Issuing Bank is to pay for goods supplied or services
furnished, as required by the contract between the parties. The difference in
application can be expressed by saying that the Commercial Documentary Credit
is activated by the "performance" of the Beneficiary. In contrast, this type of
convention supports the Beneficiary in the event of a "default".
VII. Fill in the blanks with the missing words: 1. interpretation; 2. terms;
3. potential, 4. convention; 5. issues; 6. trade; 7. responsibilities, 8.
delivery
The various parties engaged in international a) _________ must have a
general understanding of some of the basic political, legal and economic issues
that make up the framework within which such trade takes place. In every
international trade transaction there is a seller, a buyer, an agreed product or
service as object of their b) __________, which also comprises shipping and
delivery details, terms of payment and an insurance cover. The parties to any
commercial contract should take care of restrictive governmental policies, and
their c) ___________ impact. Exchange controls, tariffs and quota restrictions,
expropriation, export and import licensing, trade embargoes, antidumping
legislation, health requirements, taxation, etc. represent legal and economic d)
__________ that are to be considered in any trade transaction.
Payment against e) ____________ for imports cannot give protection
against the risk of fraud and goods shouldn't be shipped or service provided
merely against a "promisetopay paper" which has not been thoroughly
examined, authenticated or verified.
Trade f) _________ are also an important element of international
contracts of sale. They identify for the parties, what to do with respect to their
individual g) _______________. After having conducted a study on the
misinterpretation of the trade terms in 1920, The Chamber of Commerce decided
to develop rules for the h) ____________ of trade terms which the parties to the
contract of sale agree to.
III
BANKING DOCUMENTS. OPENING ACCOUNTS. STATEMENTS OF
ACCOUNTS AND BALANCE. CHEQUE, BILL OF EXCHANGE. BANK LETTER OF
GUARANTEE
Objectives:
I. Answer the following questions before reading:
1. Do you remember the difference between commercial banks and
merchant banks?
2. What is retail banking and wholesale banking?
3. What types of services are rendered by merchant banking and retail
banking?
A. BANKING ACCOUNTS AND DEPOSITS
II. Answer the following questions after reading the text:
1. How many types of banking accounts do you know?
2. What are their main characteristics?
3. What are the reasons that a bank must be cautious when opening a
new account?
4. What does the authority of opening an account with a bank mean?
5. Why do you think that a referee is needed when opening an account?
One of the ways of increasing banks deposit base, earning funds from
investment, lending and offering various services is by attracting people who are
willing to open accounts. A bank must exercise caution before an account is
opened for any person, because the bank can be sued for conversion, that is, the
deprivation of the property of a rightful owner to another person.
Therefore, a bank must always identify the person wishing to open an
account. That is, he must prove that he is the person he pretends to be. The
person must also give proof that he is a fit and proper person to whom banking
services should be given.
It must be also verified if the person has the authority to open an account
in his name. If no authority is available, the bank should not open the account. If
the person is in employment, the name of his employer should be given.
Assuming that a bank has checked the identification of the individual, the next
step is to request the person to complete the application form to open an account
and offer the names and the addresses of two persons who would act as referees.
Once the references have been proved satisfactory and the funds have been
cleared, then the customers can be issued with a checkbook. From the moment
the account is opened the bankercustomer relationship is in existence.
III. Fill in the blanks the missing words in the following text about
accounts and credit cards: 1) accounts; 2) cheque; 3) reference; 4)
agreement; 5) cash; 6) branch; 7) deposit; 8) overdraft; 9) facilities; 10)
products; 11) agreed; 12) interest.
When providing a) __________, anyone can open a current account with a
bank. Check payment may be done with the current b) ________, if there are
enough funds in the account. A check card is needed, which makes the bank
responsible for the c) ____________ passed, up to the limit stated on the card.
This sort of card acts also as a d) __________ card that allows an ATM to
withdraw cash even if the bank is closed. A payingin slip is necessary to record
the e) __________, its counterfoil of the bank with its stamp and the cashier
initials. An account can be overdrawn with the bank manager's f) _________
However, many banks have as a special product, current accounts with g)
___________ facilities automatically included, for an extra charge. As for the
deposit accounts, the customer is required to withdraw money on a withdrawal
slip handed in at the h) __________ where the account is kept. No checkbook is
supplied and there are no overdraft i) ___________.
Banks offer various types of accounts as their j) ___________ e.g. budget
accounts, by which the bank pays the customer's bills spread over a twelve
month period. Saving accounts pay their k) _________ according to the credit
balance in the account and the period it is left for. There are some penalties for
withdrawing money before the l) __________ date.
IV. Compare the two banking forms. What main differences and
similarities did you find? Discuss them in pairs and note them down.
Differences Similarities
Date .........................................
The undersigned............................................
Bearer of I.D./Passport ............................... No..................
Issued by................................. on..................
Personal numeric code.......................................................
Wish to deposit the amount of ............................. (figures and letters and denomination
of currency)
representing.................................
and please credit the account .......................... opened in the name of ............... with
Euro Bank Romania
............................................... The amount is made of the following types of bank
notes/coins:
Grand total...............................................
I hereby declare that I am aware of the legal provisions in force regarding cash operations
in Lei and foreign currency and I undertake any liability in case of noncompliance.
Deponent's signature
Pursuant to Law no 21/1999 on Money Laundering, the Bank reserves the right to make
any inquiries it considers necessary regarding the origin of funds deposited/transacted
through any account opened.
_______________________________________________________________________
To be filled in by the bank:
________________________________________________________________________
Branch .......................................
RT Option ....................................
Collected .............................. Retail account ................................
Statistic code ................................
Approval .....................................
Signature and stamp of Signature, date and stamp of the
Bank's Cashier Account Officer
To:................ Branch......................................
Dear Sirs:
I hereby request and authorize you to open and/or continue a current account in my name and in accordance with the following
particulars:
Full name (family name first) Nationality ..........................
Title of account (if different from above)....................................................
Chosen address (e.g. building, etc)
Postal Position
Tel Nos. Off:
Address in country of domicile
Profession........................................... Position
Identification (preferably passport details)
Date and Place of Birth
Employer
Name................................................... Address .........................................
References:
Names of other bankers (previous and present):
Introduced by
Check books 2550...To be mailed to above address ___________ held until called for
Special instructions (if any)
Initial Deposit
I expressly agree and accept to be bound by the Bank's separate General Conditions for the Operation of Current Accounts (which I
hereby confirm having read and understood) and any modification or variation made thereto.
Customer signature _________
Place and date ___________
___________________________________________________________________________________
For Bank Use Only
____________________________________________________________________________________
Account number Currency Type Date Opened
Approved by (name/title) .......................
Check list
A.
Contul curent personal se deschide la cererea persoanelor fizice majore, la
sucursale ale băncilor comerciale. La deschiderea contului, titularului i se pune la
dispoziţie un carnet de cecuri pentru cont curent personal. Din aceste conturi se
pot efectua plăţi periodice pentru abonamentele telefonice, radio, tv, consumului
de energie electrică şi de gaze naturale, impozitelor, chiriei, primelor de
asigurare.
Titularul beneficiază de dreptul de a imputernici şi alte pesoane care să
dispună de sumele depuse in cont prin:
clauză de imputernicire
dispozitie testamentară valabilă numai după decesul titularului
B.
Depozitul cu dobândă capitalizată se poate constitui pe termen de una sau
două luni. Termenul poate fi prelungit automat, pe o perioadă egală cu cea
prevăzută în contract. La fiecare scadenţă dobânda se capitalizează şi devine
purtătoare de dobândă. Lichidarea depozitului şi plata dobânzilor se fac simultan,
la scadenţă. In cazul in care depozitul se lichidează înainte de scadenţa, pentru
fracţiuni de timp se acordă dobândă la vedere.
C.
Stimate domnule X,
White Bank Romania lansează începând cu luna septembrie 2001 noul card
de plată pentru persoane fizice BPR VISA ELECTRON care va putea fi operabil atât
în lei cât şi în orice altă valută.
Cardul VISA ELECTRON este un instrument de economisire, în conceptul
White Bank, spre deosebire de alte banci care îl oferă ca instrument de plată.
In cadrul PBR VISA Electron beneficiaţi de dobândă la termen pentru
contul de card şi totodată puteţi să vă folosiţi banii dumneavoastră oricând doriţi,
deoarece acest card vă permite efectuarea de cumpărături fără numerar, la peste
cele 20 milioane de locaţii (puncte de plata) care acceptă carduri VISA în România
şi pretutindeni în lume, cu comision 0 la fiecare tranzacţie. Aveţi totodată
posibilitatea obţinerii de numerar 24 de ore din 24 la orice bancomat din ţară şi
din străinătate.
Apreciind loialitatea dumneavoastră, avem plăcerea de a va oferi gratuit
un card BPR VISA Electron, pe care îl puteţi găsi în interiorul broşurii alăturate.
Pentru a activa acest card este suficient să completaţi cererea de emitere
anexată şi să o returnati personal, până la data de 1 Decembrie 2001, la una din
următorele unităţi ale băncii :……
Cu ocazia returnării cererii de emitere la bancă, vi se va înmâna plicul cu
codul dumneavoastra personal de identificare (PIN) iar cardul va fi activat întrun
interval de 24 ore.
Transformarea depozitelor existente in «deposit card» nu va afecta
dobânda care vi se cuvine.
B. Statements of accounts and balances
VI. Answer the following questions before reading the text:
1. What do you know a statement of account is?
2. Who needs this document to be issued? The bank or the customer?
VII. Answer the following questions after reading the text:
1. How are the books kept in a bank nowadays?
2. When does a bank issue a statement of account?
3. Why does the bank officer need precise instructions for handling the
statement of account?
VIII. Notice the main characteristics of the following account statement,
and translate its parts into Romanian:
ROTBank
ACCOUNT STATEMENT
1. Account no._________________________________2. Currency ____
3. Statement date
4. Statement no.
5. Pages
6. Branch
7. Address
8. Branch code
_____________________________________________________________
Booking reference Narrative Value date Amount
_____________________________________________________________
Total credit Total debit Closing balance
IX. Translate into Romanian the following text belonging to the
information rendered by an account statement.
Debitările sunt marcate cu semnul minus.
Va rugăm verificaţi extrasele de cont şi notificaţi în scris eventualele
reclamaţii. In cazul inchiderii contului, reclamaţiile referitoare la extrasul final
trebuie semnalate în scris in timp de patru săptămâni de la primirea lui. Subliniem
că, în conformitate cu "Condiţiile generale de Afaceri", în lipsa unei astfel de
reclamaţii notificate în termenul menţionat extrasul de cont se consideră
acceptat. Rata de schimb folosită în fiecare tranzacţie prezentată în acest extras
este în concordanţă cu legislaţia în vigoare. Ratele de schimb stabilite de către
banca pentru operaţiunile de schimb valutar şi de către banca centrală pentru alte
operaţiuni sunt publicate zilnic şi pot fi consultate la ghiseele băncii
Afişarea ratelor de schimb ca şi confirmările pentru operaţiunile de schimb
valutar trebuie considerate ca făcând parte din extrasul dvs de cont.
C. CHEQUE
X. Answer the following questions before reading the text:
1. Define a cheque.
2. What kind of instrument is that?
3. How is it used?
XI. Read the following text and answer the questions:
1. When did the cheque system appear?
2. Who is the drawer?
3. What are the responsibilities of the drawee?
4. Who is the payee?
5. What is a cheque book?
6. What is a clearing house and how did it appear?
A.
Even by the end of the 17th century, customers of banks were beginning
to settle debts by writing letters to the bank ("the drawee"), instructing it to pay
money to the person stated (the "payee") at the same time debiting the account
of the person paying (the "drawer"). Such a method of settling debts was very
convenient to the customer for it saved him carrying around large sums of money
and also permitted him to write his instructions for any odd amount. Above all, to
the banker it possessed the inestimable advantage that, if the payee were also
one of his customers, he would probably, instead of actually withdrawing the sum
authorized, pay the "check" into his own account. If so, the deposits held by the
bank would not be touched and the transaction could be recorded by a mere book
entry. Consequently, when the right of the large London banks to issue notes was
withdrawn they encouraged this cheque system, and from about the middle of the
eighteenth century they even issued checkbooks.
The system was more complicated, however, when the drawer and the
payee were customers of different banks. The payee would pay the check into his
own bank, which would credit his account and then, in order to receive
reimbursement, present it for payment with other checks to the drawee (the bank
on whom it was drawn). Such a procedure necessitated each bank's holding large
amounts of ready money, while clerks had to go from bank to bank collecting the
sums in due. In time these clerks hit on the idea of meeting at a suitable
coffeehouse in order to set off one check against another and pay over the
balance due. Their employers, the banks, took up the idea and in 1773 the first
clearinghouse was set up in London, the famous Lombard Street. The result was a
great saving in the amount of cash actually used to settle debts. All the cash
deposits could now be used as the reserve, and money could again be 'created',
not only by issuing banknotes, but also by granting a loan to the borrower.
Simply giving him a deposit, which is a credit in his account on which he could
draw by writing checks, did this. Later, as each clearing bank adopted the custom
of keeping deposits at the Bank of England, it was possible for the daily
settlement to be made by an adjustment of their accounts there.
The check system developed rapidly during the nineteenth century as one
bank after another lost its right to issue notes.
B.
A cheque is a written order to a bank given by someone who has money
deposited with that bank, to pay a certain amount to a person named. There are
three parties to the cheque:
the drawer is the person who makes out or “draws” the cheque
the drawee is the bank on which the cheque is drawn
the payee is the person to whom it is made payable
A cheque is payable on demand. It is both. It is both a payment and a
credit instrument, negociable through endorsement and largely used in
commercial transactions.
A cheque includes the following essential elements:
1. the word “cheque“ included in the text;
2. the exact name of the drawee (the bank that honours the cheque);
3. the drawer’s signature and that of the bearer;
4. the name of the payee;
5. the drawer's signature.
Cheques may be crossed or uncrossed. An uncrossed cheque is an open
cheque. A cheque is crossed for safety, with two lines printed across it. The
cashing of a crossed cheque is restricted to a person possessing a bank account.
It is paid only by the banker on whom is drawn. Crossing may be general or
special. A crossing is a material part of a cheque and no person may obliterate it.
The drawer of a cheque may cross it either generally or specially.
Cheque Books are printed are books of blank forms for writing out cheques
supplied by bankers for the value of the stamp duty only, to all customers having
running accounts with them.
There are also cheques which are given to persons traveling abroad.
XII. Explain in your own words the following flowchart representing the
working of the cheque:
Issuer Payee
Issuer's Bank Payee's Bank
XIII. Fill in the blanks the following missing words: a) credit; b) bank; c)
order; d) honored; e) cheque; f) himself; g) parallel; h) cross; i) account;
j) fraudulent; k) collection; l) balances.
A cheque is an "unconditional 1) ___________ in writing addressed by one
person to another, signed by the person giving it, requiring the banker to pay on
demand a certain sum in money or to the order of a specified person or to
bearer".
The drawer is the person who draws the 2) __________ and the payee is
the person to whom the money is made payable. The bank on whom the cheque
is drawn is called the drawee 3) ___________. The drawer and the payee can be
one and the same person when a person draws a cheque payable to 4)
___________. The banker has the duty to honor cheques drawn by the customer
according to the 5) _________ money available in the customer's account, or
within an agreed overdraft limit.
The cheques are paid and debited against the 6) __________ held on
customer’s accounts, by being passed through the clearing system.
Unpaid cheques are returned with a reply indicating the reason for not
having been 7) ____________. One precaution taken for ensuring that persons
who are not entitled to it, cannot obtain its value, is to 8) ____________ the
cheque. In this case, the drawer will make it more difficult for a 9) ___________
person to obtain value for it. Crossing can be general or special. A general
crossing is represented by two 10) ___________ lines on the face of the cheque.
This kind of cheque may not be cashed over the counter of a bank but must be
paid into a banking account for 11) ___________. The name of a particular bank
is written across the face of a cheque with a special crossing, that can only be
paid into an 12) ____________ with that bank.
XIV. Read the following text and draw the main ideas from it in a written
form:
Endorsement is defined as the signature of a cheque by the holder
followed by delivery of the instrument whereby the holder of a cheque payable to
his order negotiates it to another person, who takes it as a new holder. In order
to operate a legal transfer of an order cheque, a correct and genuine
endorsement is necessary. Every endorser guarantees the genuineness in all
respects of the drawer's signature and all previous endorsements. An
endorsement can be blank or special. A blank endorsement specifies no endorsee
and its effect is to make the instrument payable to the bearer. The holder writing
above the endorser's signature a direction to pay the cheque to, or to the order
of, himself or some other person can convert it into a special endorsement. A
special endorsement specifies the person to whom, or to whose order, the
instrument is to be payable.
XV. Read the text and fill in the blanks the missing words: a) travelers;
b) evidence; c) signature; d) charge; e) cash; f) safety; g) account; h)
currencies.
Travelers' cheques are the usual method by which 1) _________ take
money abroad to provide expenses. They are available in different 2) _________
and are exchanged for local currency at the cashing banker's rate of exchange for
sight drafts. At most a passport or some 3) ________ of identity is requested as
a condition of cashing. The holder signs the cheque in the presence of the bank
officer and his or her 4) ___________ must agree with the one already on the
cheque. Travelers' cheques issued but not used, can be either paid into the
holder’s bank 5) _________ or cashed by the issuing bank. If lost, most banks
replace them free of 6) ____________ Simplicity, general acceptability,
cheapness and 7) __________ are the main advantages of the traveler’s
cheques. Hotels and shops accept cheques for payment, and they can be used in
place of 8) ___________ when banks are closed.
XVI. Translate into English:
a) Cecul este un instrument de plată care pune în legătură trei persoane:
trăgătorul, trasul şi beneficiarul. Instrumentul este creat de trăgător, care, în
baza unui disponibil constituit în prealabil la o societate bancară, dă un ordin
necondiţionat acesteia, care se afla în poziţie de tras, să plătească la prezentare,
o sumă determinată, unei terţe persoane sau însuşi trăgătorului aflat în poziţie de
beneficiar. Deci, trăgătorul emite cecul, posesorul legitim îl încasează, iar trasul îl
plăteşte.
b) Procedura de completare a cecului de călătorie a fost astfel adoptată
încât să nu facă posibilă folosirea frauduloasă şi falsificarea acestora. Astfel,
titularul va semna pe dreapta documentului, la momentul cumpărării acestuia de
la bancă şi în stanga jos numai în prezent prestatorului, atunci când sunt plătite
diverse servicii sau mărfuri. Prestatorul va putea astfel să compare cele două
semnături şi să autentifice originalitatea cecului. Dacă prestatorul are dubii în
privinţa semnăturii titularului, acesta mai poate semna o data pe spatele cecului.
Este foarte important ca semnătura sa fie făcuta în prezenţa prestatorului şi nu
înainte, pentru ca altfel cecul nu va fi acceptat.
D. The Bill of Exchange
XVII. Answer the following questions before reading the text:
1. What are the main payment instruments used in international trade?
2. What do you know a bill of exchange is?
Bills of exchange were in use long before cheques, and they were first
mentioned in history in connection with merchants from Lombardy. At that time
the bill of exchange was not a negotiable instrument, and in the Middle Ages, (13
14th century) it was not even transferable in payment of debts. From 1663
endorsement was permitted and the bill of exchange was made payable to
bearer. It was in 1764 that the bills of exchange and the promissory note were
finally recognized by the law.
During the nineteenth century, the bill of exchange was the accepted
instrument of financing trade, both internal and foreign, but since then the
cheque system has displaced it for internal use, while in foreign trade it has been
replaced by other methods, notably the bank draft and telegraphic transfer by
which bank deposits are directly transferred from one bank to another. When a
nation is trading with another nation, the goods are paid chiefly by the money
which is received from the sale of current exports. In normal times, importing and
exporting are done by private individuals and firms, and payments are arranged
through banks, who exchange the currency of one country for the currency of
another provided that they have the necessary reserves of that currency. Such
reserves are earned by customers who export to foreign countries.
XVIII. Answer the following questions:
1. When did the bill of exchange appear?
2. What was its historical evolution in the Middle Ages?
3. When it was accepted as an instrument of financing trade?
4. What is the way of doing business nowadays from payment point of
view?
XIX. Fill in the blanks the missing words: 1) bill; 2) ownership; 3) prior;
4) recourse; 5) person; 6) payment; 7) acceptance; 8) payment; 9)
consequences.
The a) _____________ who draws a bill is the drawer; the person on
whom it is drawn is called the drawee and the person to whom it is drawn
payable is the payee. When the drawee accepts the b) ___________, he is known
as the acceptor. An acceptance of a bill of exchange is either general or qualified.
Discharging a bill is the performance of setting free or c) ___________ of
a bill, after which all rights are 'extinguished'. When a bill is endorsed, that is its
d) ___________ is transferred, it is signed on the back by the endorsee.
Most bills are accepted when presented for e) __________, and duly paid
when presented for payment. However, acceptance or f) __________ is refused,
then the bill is said to be dishonored by nonacceptance or by nonpayment. The
person presenting the bill must give notice of dishonor to g) ___________ parties
and have the bill 'noted' or protested with a notary public. Failure to take the
proper steps promptly may have serious h) _____________. An immediate right
or i) ______________ against the drawer and endorser accrues to the holder if
the bill is dishonored.
XXI. Look at the following bills of exchange and identify the main
parties to the bill:
_______________________________________________
Address
23rd April, 1992
£10,000
Three months after date, pay to me or to my
order Ten thousand Pounds, value received.
(Signed) "Y"
To "B"
Address
_____________________________________________________________
XXI. Explain in your own words the mechanism of payment made with a
bill of exchange:
The actual process is as follows. A exports $20 000 worth of wheat to X
who, in order to settle the debt, pays Ł10 000 into his bank in London. A,
however, wants payment in dollars and so the bank cables its branch in New
York, authorizing it to make this equivalent dollar payment. It can only do this if
it has these dollars in reserve.
These reserves have been secured by the payment into the bank of $20
000 but B, who has imported British cars to that value. Y is paid from the Ł10 000
which X deposited for the wheat. Thus the two transactions cancel out and the
reserves remain the same.
Assume:
a) rate of exchange is $2.00 to the £ sterling
b) no currency restriction
c) A is US exporter of wheat; X is UK importer of wheat;
d) B is US importer of cars; Y is UK exporter of cars.
Branch pays A X
$20000 wheat Pays £10000 to
bank
The generally accepted custom of business was that an importer should be
allowed a period of grace, usually three months, before payment or the goods
would be required. This was arranged as follows:
When Y was ready to ship his cars to B he would draw up a bill of
exchange for the value of £10,000 as shown. This would be sent to B together
with copies of the shipping documents, such as the bill of lading and insurance
certificate to show that the cars had actually been placed aboard the ship. On
receipt of the bill, B would "accept" it, by writing "Accepted" and his signature
across the face of the bill, and then return it to Y. This acceptance of the bill by B
would be condition for handing over the original bill of lading, the documentary
title to the cars.
Y could now do one of three things:
1. he could hold the bill until it matured at the end of 3 months;
2. he might be able, after endorsing it to get another merchant to take it in
settlement of a debt which Y owed;
3. he could sell the bill, usually to a discount house.
The probability is that Y would choose the latter course, and after
endorsing it he would take it to a discount house and sell it to a lower price than
its face value, the exact amount depending on the length of time it still has to run
to maturity, the prevailing shortterm rate of interest and the opinion of the
discount house as to B's financial standing. Through the process of discounting
the Bill of Exchange has advantages to all concerned. The exporter Y can quickly
regain liquidity by selling the bill, while B obtains three month’s credit, during
which time it is probable that he will be able to sell the cars which he has
imported.
Discount houses do not usually hold bills for their full currency, as they are
assembled in 'parcels' and sold to the commercial banks who like to have so
many falling due each day. There are a few 'running brokers' who act as agents in
the process of discounting.
From the risk point of view, the accepted bill is almost as good as cash.
However, bills are drawn on firms whose financial standing is little known. Thus,
the discount house is either reluctant to discount the bill or will do so only at a
fairly high rate of interest. The difficulty can be overcome by getting a firm of
international reputation to accept responsibility for payment should B default. It is
obvious that any firm accepting such a bill must have adequate knowledge of the
creditworthiness of the trader upon whom it is drawn. Merchant banks that
specialized on financing trade possess such knowledge. In their capacity of
accepting bills, such merchant banks are known as "acceptance houses". They
charge a small commission which is willingly paid because the rate of discount on
a "bank bill", that is, one bearing the name of an acceptance house, is lower than
on a "trade bill", a bill accepted only by the trader.
The decline of this business has increased the importance of merchant
banks the "issuing" business connected with the raising of capital by industrial
and commercial firms. Merchant banks also underwrite them and arrange for the
payment of dividends to the stockholders as they fall due. They also carry on
some domestic banking business and act as trustees and investment advisers to
trust funds, pension funds, college endowments.
XXII. Translate into English:
A. Cambia este un instrument cu ajutorul căruia, în calitate de trăgător, vă puteţi
plăti o datorie faţă de o anumită persoană (beneficiar) prin intermediul unei alte
persoane (tras) care vă era datoare şi căreia îi ordonaţi să plătească
beneficiarului sau posesorului cambiei suma respectivă la o anumită dată. Atunci
când doriţi să faceţi o plată în condiţiile de mai sus, formularul de cambie va avea
următoarele elemente:
numele şi semnătura dumneavoastră;
numele trasului;
adresa, numărul contului şi banca trasului;
data şi locul emiterii;
locul plăţii;
scadenţa;
numele beneficiarului;
adresa, codul fiscal şi ştampila dumneavoastră;
suma în litere şi în cifre;
moneda.
Când unul dintre debitorii dumneavoastră doreşte să se achite de obligaţie prin
emiterea unei cambii pe care vo remite, în calitate de beneficiar al cambiei aveţi
următoarele posibilităţi de a va exercita drepturile:
a)
să prezentaţi cambia trasului pentru acceptare pentru a fi sigur de plata
acesteia la scadenţă;
să prezentaţi cambia trasului la plată;
să giraţi în favoarea unui terţ faţă de care aveţi o obligaţie; în acest caz va
trebui să înscrieţi pe versoul cambiei următoarele date:
numele dumneavoastră;
numele persoanei căreia îi giraţi titlul (giratarul)
data girării
semnătura dumneavoastră
dupa care predaţi cambia persoanei în cauză.
b)
să o scontaţi la banca înainte de scadenţă; vi se va plăti suma înscrisa pe
cambie, mai puţin comisionul băncii pentru astfel de operaţii.
E. DEMAND GUARANTEES
XXIII. Answer the following questions
1. Explain the word "guarantee".
2. What is the difference between guarantee and warrant
XXIV. Read the following text and mind the main ideas:
A company entering into a contract for the purchase of goods or services
may wish to have security for the counterpart's performance of its obligation,
particularly when no other dealing were concluded between the two. Some times
ago it was used to require the furnishing of a cash deposit as security, but this
became prohibitively expensive. A more convenient safeguard took its place: the
provision of a written undertaking by a bank in favor of the buyer payable on
demand. These undertakings are known under the common name of bonds,
guarantees, demand guarantees and standby letters of credit. The demand
guarantees is the substitution of cash guarantee, which is designed to provide the
beneficiary with a speedy monetary remedy against the counterpartunderlying
contract. The demand guarantee is payable solely on presentation of a written
demand and any other specified documents. The guarantor must pay any demand
within the amount stated,, regardless whether the underlying contract has in fact
been broken and regardless of the loss actually suffered by the beneficiary.
XXV. Answer the following questions after having read the text:
1. When it is necessary to use a Bank Guarantee Letter?
2. What are the main elements of such a document?
3. How many types of guarantee letter do you know? Describe them.
4. Who is the principal debtor?
5. Who is the payee?
6. Who can be the issuer of a Bank Guarantee Letter?
By issuing a letter of guarantee (LG) a bank accepts to pay the obligation
of a person to a third party, in case that this person does not fulfill the obligation
himself.
The bank issuing a bank guarantee letter accepts a very big risk. The risk
is that the bank will pay an amount equal to the one referred on the LG to a third
party, under certain conditions. Of course, in such a case the bank pays and then
turns to its client and asks for the money. However, the amount of money has
collectibility problems.
The bank guarantee is usually given in the form of a letter containing the
following essential elements:
types of guarantee (simple, solidary)
name and address of the guarantee bank
the name and address of the legal or natural person to be guaranteed
the name and address of the beneficiary
the object of guarantee
value of the guarantee expressed in a specific amount
validity of the guarantee
special clauses related to the extension of the date of payment.
A bank guarantee may be: simple when the guarantee bank can request the
beneficiary to sue first the principal debtor and only after he has failed to effect
payment, to demand execution of the bank and solidary when the beneficiary
can demand execution of the bank without previously suing the guaranteed
principal debtor and the bank being in no position to object to this procedure,
respectively to oppose the benefit of discussion or division.
The content of a letter of guarantee includes usually the following wording:
" in consideration of the above, we ________ bank do grant the required
guarantee in favor of the above firm and hereby irrevocably and unreservedly
engage ourselves, weaving the benefit of discussion, to pay you within ________
days, irrespective of any contestation objection or exception of the said firm, and
without being entitled to investigate whether your claim is grounded or not, any
amount not exceeding ...........to which our present guarantee is limited."
The commission charged by a bank for issuance of LGs usually depends on
the risk accepted and on the maturity of the LG. There are LGs with specific
maturity date (they are valid until a specific day and the guarantor has no
obligation after this date) and there are also open LGs.
A bank guarantee letter is a document annex used in making payments in
international economic exchanges, whereby a first order bank undertakes to
make payment, if legal or natural person, called the principal debtor fails to pay a
certain amount of money at the stipulated time, in favor of another legal or
natural person, called the payee. As a rule, banks issue guarantee letters. As an
exception, reputable commercial firms can also issue guarantee letters. They are
issued to guarantee an export, an import, open a letter of credit, refund advance
money or to participate in a tender. The obligation assumed by the issuing bank
of the guarantee letter is a secondary one, while the main obligation to make the
payment out rests with the principal debtor. Any obligation deriving from a bank
guarantee letter over and above the amount of the principal obligation is null and
void. In the event that the principal debtor has not settled his account when a
payment is due, the beneficiary approaches banks within a specific date for which
the bank guarantee letter has been issued. If the bank fails to effect payment,
the beneficiary resorts to the court of law to obtain execution of the guarantee
letter and payment of the amount. It is only after he has cashed the amount that
the beneficiary must return the guarantee.
XXVI. Match the following missing words: 1. demand; 2. institutions 3.
underlying; 4. payment; 5. supplier; 6. performance; 7. guarantee.
A demand guarantee is defined as an undertaking for a) __________ of a
stated sum of money on presentation to the party giving the undertaking of a
demand for payment as may be specified in the guarantee within a specified
period of time. Most of the guarantees are payable on first written b)
___________ without any additional documents. Whereas documentary credits
are used to ensure that the supplier is paid, demand guarantees safeguard the
buyer against nonperformance, late or defective performance by the c)
___________. Demand guarantees are issued usually by banks and recently by
other financial d) _________. Demand guarantees are defined by three parties:
the account party (or “principal”) which is usually the seller, supplier or the
contractor, whose e) __________ is required to be covered by the guarantee and
who gives instructions for its issue. The guarantor is the bank or other party
issuing the f) __________ on behalf of its customer, the principal. The beneficiary
is the part in whose favor the guarantee is issued. This is the other party to the
g) ________ contract, the buyer.
Guarantor Guarantee
instruction letter
Principal
Importer's Issuing Bank Beneficiary
Reimbursement Bank
Exporter Corresponding Bank
Advising Bank
XXIX. Translate into English:
A.
Datorită legislaţiei şi tradiţiei existente in fiecare ţara, în textele garanţiilor
bancare apar termeni ce sunt interpretaţi diferit de părţile interesate. Specialiştii
consideră că pentru evitarea echivocului trebuie avute în vedere cele două
categorii de garanţii:
garanţia bancară independentă prin care banca garantă se angajează să
plătească o sumă determinată celui garantat în funcţie de condiţiile precizate în
textul garanţiei
garanţia dependentă prin care instituţia garantă leagă mai precis obligaţia sa de
plată de neîndeplinirea obligaţiilor contractuale de către client faţă de beneficiar.
B.
Luând în considerare cele de mai sus, noi, banca _______ acordăm
garanţia cerută în favoarea firmei menţionate mai sus şi ne angajăm irevocabil şi
necondiţionat, de a va plăti în _________ zile, în ciuda oricăror contestaţii sau
excepţii ale firmei menţionate, şi fără a fi imputerniciţi să investigăm dacă cererea
dvs este fondată sau nu, orice sumă ce nu depăseşte _________ la care se
limitează prezenta garanţie.