Refer to supporting documents required in trade settlement (collection method, letter of credit) These documents are defined and

d in line with the rules and procedures in the Uniform Rules of Collections (URC Publication No. 522) URC No. 522 defines documents either as financial document or commercial document.

Section 3, Malaysian bill of exchange act 1949 defines: A bill of exchange 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 / at a fixed / determinable future time a sum contain in money to, or to the order of a specified person, or to the bearer.

Drawer The person who draws the BOE. In the case of trade transactions, the seller would draw the BOE on the buyer. The seller is therefore, referred as the drawer.

Drawee The party who will be making the payment on the BOE. It is normally the buyer, although it could be any other party, if so named in the BOE.

Payee The party who is to receive the amount stated in the BOE. Acceptor Term/usance BOE require the acceptor to signify acceptance of liability. The acceptance us made by the drawee by signing on the face of the BOE with/without the word accepted to indicate his/her liability.

Endorser The one who endorses on the reverse of BOE. The need for endorsement comes about when the payee decides to transfer or negotiate the BOE to another party.

2 ways of endorsement: 1. Blank endorsement This would make the BOE payable to holder. 2. Payable to order This would transfer the title to the named bank, which then becomes the holder. The bank can further transfer the BOE by endorsing it to another bank or person.

Payable to order

(Signature) _____________________ Betty A. Cotton Assistant Vice President

Blank endorsement

BOE payable on demand (inland)

BOE payable at sight

BOE payable after a fixed term / usance period

A documents to specify the quality and quantity of the goods consigned and the price charged (include price per unit, total value, name and addresses of the exporter and the importer, the number of packages, insurance charges, term of delivery, and term of payment). The description must tally with those in the letter of credit

Special type of invoice that is issued by the consular office of the importing country, which office located in the exporters country. May differ in details and information base on the particular country requirement. Not the title document to the goods being shipped and is not negotiate

May take the form of either a brokers note, an insurance certificate or an insurance policy Coverage for the goods dispatched and should be bought by the parties concerned Under letter of credit, this document must comply with the risks coverage, currency and insured amount.

Documents that indicate loading on board or dispatch or taking in charge Provides evidence of a contract of carriage of receipts of goods and sometimes a document of title to possession of goods. Transport document include: Bill of lading Airway bill Air consignment note Railway receipt Lorry receipt Delivery order Postal receipts Certificate of posting Multi-modal transport document

6. Certificate of origin This document is sometimes called for to certify the country of origin of the goods and is required by the custom department for assessing duty payable. Can be issued by the chamber of commerce / any other institutions approved by the government.

This invoice is a document containing information similar to a commercial invoice, but is issued prior to the sale of the goods. It can be treated as a quotation and is normally required for purposes of obtaining an import license and / or exchange approvals. Bank normally accept this for processing an application for a Letter of credit.

Blacklist certificate, Weight note, packing list, veterinary certificate

The eighth and current version of the Incoterms rules Incoterms 2010was published on January 1, 2011. Defines 11 rules reducing 13 rules in 2000

A Standardized common language for buyers and sellers To avoid misunderstanding It is essential that both buyer seller are fully aware of the distribution of costs and their respective responsibilities. Incoterms define which of the two parties are responsible for packing, port and carriage costs, marine insurance, customs duties and taxes

Eliminate the barriers caused by distance, language and local business practices; Eliminate uncertainties and different interpretations of trade terms on a worldwide scale Reduce risks and time wasted caused by misunderstanding, disputes and litigations; Provide a universal vocabulary which is accepted by all major international financial institutions; Facilitate international commercial exchange

EXW Ex Works (named place of delivery) The seller makes the goods available at its premises. This term places the maximum obligation on the buyer and minimum obligations on the seller. The Ex Works term is often used when making an initial quotation for the sale of goods without any costs included. EXW means that a seller has the goods ready for collection at his premises (works, factory, warehouse, plant) on the date agreed upon.

The buyer pays all transportation costs and also bears the risks for bringing the goods to their final destination. The seller doesn't load the goods on collecting vehicles and doesn't clear them for export. If the seller does load the good, he does so at buyer's risk and cost. If parties wish seller to be responsible for the loading of the goods on departure and to bear the risk and all costs of such loading, this must be made clear by adding explicit wording to this effect in the contract of sale.

FCA Free Carrier (named place of delivery)

The seller hands over the goods, cleared for export, into the disposal of the first carrier (named by the buyer) at the named place. The seller pays for carriage to the named point of delivery, and risk passes when the goods are handed over to the first carrier.

CPT - Carriage Paid To (named place of destination)

The seller pays for carriage. Risk transfers to buyer upon handing goods over to the first carrier.

CIP Carriage and Insurance Paid to (named place of destination)

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The containerize transport/multimodal equivalent of CIF. Seller pays for carriage and insurance to the named destination point, but risk passes when the goods are handed over to the first carrier.

DAT Delivered at Terminal (named terminal at port or place of destination) Seller pays for carriage to the terminal, except for costs related to import clearance, and assumes all risks up to the point that the goods are unloaded at the terminal. DAP Delivered at Place (named place of destination) Seller pays for carriage to the named place, except for costs related to import clearance, and assumes all risks prior to the point that the goods are ready for unloading by the buyer.

DDP Delivered Duty Paid (named place of destination)

Seller is responsible for delivering the goods to the named place in the country of the buyer, and pays all costs in bringing the goods to the destination including import duties and taxes. This term places the maximum obligations on the seller and minimum obligations on the buyer.

FAS Free Alongside Ship (named port of shipment)

The seller must place the goods alongside the ship at the named port. The seller must clear the goods for export. This term is typically used for heavy-lift or bulk cargo.

FOB Free on board (named port of shipment)

The seller must load the goods on board the vessel nominated by the buyer. Cost and risk are divided when the goods are actually on board of the vessel (this rule is new!).
The seller must clear the goods for export. The term is applicable for maritime and inland waterway transport only but NOT for multimodal sea transport in containers. The buyer must instruct the seller the details of the vessel and the port where the goods are to be loaded.

CFR Cost and Freight (named port of destination)

Seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods are loaded on the vessel (this rule is new!). Maritime transport only and Insurance for the goods is NOT included. This term is formerly known as CNF (C&F).

CIF Cost, Insurance and Freight (named port of destination)

Exactly the same as CFR except that the seller must in addition procure and pay for the insurance. Maritime transport only.

The UCP provisions have determined the rules of engagement between the various parties to a LC (Letter of Credit) and in particular between the banks involved in a transaction in some capacity. UCP 500 - has been in force since1993 and is now to be replaced with the revision titled UCP 600.

UCP 500 - offered many improvements but still fell short of the expected reduction in disputes arising from inconsistent interpretation and application particularly of certain terms like 'negotiation' and 'reasonable time'.

The UCP 600 (Uniform Customs & Practice for Documentary Credits) is the official publication issued by the ICC (International Chamber of Commerce). The UCP 600 has taken over 3 years to develop and deliver a more proactive business oriented set of rules for those involved in international trade.

The UCP 600 comes into effect from 1st July 2007. All banks are expected to issue new LCs under the UCP 600 guidelines from that date. Existing LCs covered by earlier versions of UCP will continue until their maturity.

UCP 600 provides a stronger base for consistency and clarity on a number of issues and it is expected to support the continued use of LCs as a key facilitator of international trade. UCP 600 includes only 39 articles, a significant reduction from the 49 articles of UCP 500.

The end..