Incoterm 2000
Incoterm 2000
Document Draft
A draft, sometimes also called a bill of
exchange, is analogous to a foreign buyer's
check. Like checks used in domestic
commerce, drafts carry the risk that they
will be dishonored. However, in
international commerce, title does not
transfer to the buyer until he pays the draft,
or at least engages a legal undertaking that
the draft will be paid when due.
Sample of
Irrevocable Letter of Credit
Open Account
In a foreign transaction, an open account can be a
convenient method of payment if the buyer is well
established, has a long and favorable payment record, or
has been thoroughly checked for creditworthiness.
With an open account, the exporter simply bills the
customer, who is expected to pay under agreed terms at
a future date. Some of the largest firms abroad make
purchases only on open account.
However, there are risks to open account sales. The
absence of documents and banking channels might make
it difficult to pursue the legal enforcement of claims.