Page 51 - DMGT546_INTERNATIONAL_TRADE_PROCEDURE_AND_DOCUMENTATION

International Trade Procedures and Documentation

Notes Letter of Credit: Issued by a bank, indicating that the bank will make payment under special
circumstances.
Sight Draft: A draft payable on presentation to the drawee.
Time Draft: A promise to pay by the accepting party at some future date.

2.5 Review Questions

1. What do you mean by letter of credit? What are the various types of letter of credit?
2. What are Incoterms? What is their purpose and why are they considered as base of trade
transactions?
3. Discuss the various Incoterms in detail. What group of Incoterms is preferable to Exporters?
Give reasons.

4. ‘ICC revise Incoterms so as to send them to the need of trading community’. Discuss.
5. What are the precautions which should be taken by exporter and importer in selection of
Incoterms for international trade transactions?

Answers: Self Assessment

1. Confirmed 2. merchant
3. Trading 4. owes

5. cannot 6. unconfirmed
7. Cash-in-advance 8. Open Account
9. Collecting Bank 10. Special or Standby letters of credit
11. Incoterms 12. consistency
13. Group E 14. FCA

15. DES
2.6 Further Readings

Books Cherenilan Francis, International Economics, 4th Edition, Tata McGraw-Hill
Publishing Company Limited.
Dr. Ram Singh, International Trade Operations, Excel books 2009
Aseem Kumar, Export and Import Management, Excel books, 2007

Pradeep Kumar Sinha and Sanchari Sinha, International Business Management: A
global perspective, Excel books, 2008

Online links www.foreign-trade.com/reference/incoterms.cfm
www.customs.gov.au/webdata/resources/files/Incoterms.pdf
www.eximguru.com/exim/incoterms.aspx

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