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Schedule for International Settlement

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Uniform Customs and Practice for Documentary Credit, ICC Publication No.A sample documentary bill of exchange used in a documentary credit transaction

Schedule for International Settlement

    国际结算课程教案

I. Brief introduction to the course (课程简介)

    Main Contents (课程内容)

    The course contents consist of three major parts: negotiable instruments, payment techniques in international trade finance and documents related to international settlement. In the section of negotiable instruments, we will mainly discuss both broadly and narrowly defined negotiable instruments, but with the emphasis on the narrowly defined negotiable instruments, including bills of exchange, promissory notes and cheques. The main payment techniques that will be taught in the course include remittance, collection, letters of credit, guarantees, standby letters of credit, international factoring and international forfaiting. The documents related to the international settlement include drafts, invoices, bills of lading, insurance policies, certificate of origin, inspection certificates, etc., and the requirements for the documents are mainly discussed under the documentary credit transaction.

    Teaching methods?教学方法,

    Teaching methods include lectures with interactions between students and teacher, cases studies, presentations by students, group discussions, and independent studies by students. While lecturing is the major form of course teaching, students can download the teaching PPTs and supplementary materials from the Sky Class at the website of the Teaching Affairs Department of Nanjing University and the Teachers’ Garden at the website of the School of Business.

    Objectives?教学目标,

    ; Introduce comprehensive theories and practices on international settlement; ; Provide a great number of English terms on international banking;

    ; Make it easier for students to adapt to the future work relating to international trade and

    banking.

    Textbook (教材)

    赵薇!《国际结算-国际贸易融资支付方法》?International Settlement: Payment

    Techniques in International Trade Finance, 东南大学出版社!200612月。

Major references (参考书)

    Dudley Richardson, Guide to Negotiable Instruments and the Bills of Exchange Acs,

    London Butterworths, 1983.

    Uniform Customs and Practice for Documentary Credit, ICC Publication No. 600,

    effective since July 1, 2007.

    Uniform Rules for Collection, ICC Publication No. 522, effective since January 1,

    1996.

    Johan Bergamin, Payment Techniques in Trade Finance. ING Barings, April/May

    1999.

    John S. Gordon, Exporter/Import Letters of Credit and Payment Methods: Making

    Payments in International Trade. Second Edition. Global Training Center, Inc.,

    Dayton, 2002.

    Evaluation (考核)

    ; Attendance: 10%

    ; Case study and presentation: 20%

    ; Final examination: 70%

II. The arrangement of the course

    Chapter 1 Introduction 概论

    Teaching Hours (课时): 4

    Main contents (主要内容)

    ; The term of “international settlement” and the main contents of the course;

    ; Why should we study the course in English?

    ; The meaning of international settlement;

    ; The evolution of international settlement;

    ; Main methods of international settlement;

    ; Related rules, customs and practice;

    ; Correspondent banking relationship;

    This chapter is a general introduction to international settlement. Students are required to know the main contents of the course and have a general idea about what the course is about. In this chapter, some points should be noted, that is, the meaning of international settlement, the characteristics of the evolution of international settlement, the traditional payment techniques an exporter can choose, the risks for the exporter to take into account in making payment decisions, the related laws, rules, and customs and practice in international settlement, the different banking institutions, and how to establish a correspondent banking relationship.

     Chapter 2 Negotiable instruments 流通票据

    Teaching Hours (课时): 10

    Main contents?主要内容,

    ; General introduction to negotiable instruments;

    ; Bills of exchange;

    ; Promissory notes;

    ; Cheques.

     Negotiable instruments

    Students will learn the definition of a negotiable instrument, including both broadly and narrowly defined negotiable instruments, and the features and functions of negotiable instruments. The evolution of negotiable instrument laws is traced. And the most important to learn is the basic parties and derivative parties to negotiable instruments, and the relationships between different parties.

    Bills of exchange

    It is about the definition of a bill of exchange, the essential items of a bill of exchange, the acts relating to a bill of exchange, and the classifications of a bill of exchange. A sample documentary bill of exchange used in a documentary credit transaction is illustrated in detail. Promissory notes

    The learning contents include the definition and essential items of a promissory note, the difference between joint notes and joint and several notes, the difference between a bill and a note, and the types of notes.

Cheques.

    The learning contents include the definition, essential items and the types of cheques, and the difference between a bill and a cheque.

    Cases studies () 案例研究

    Forged Bank Acceptance (伪造银行承兑汇票案); Loss of a Bill of Exchange (汇票遗失案);

    Dishonour of a Bill of Exchange (汇票拒付案); Disputes on International Promissory Notes (涉外

    本票伪造引起纠纷); Disputes on Bank Acceptance (承兑汇票纠纷案).

    Students are required to present their analysis and viewpoints about the cases in class.

    Glossary ;相关词汇;

    Negotiable instruments, payment techniques, documents, consignment, open account, documentary credit, letter of credit, guarantee, standby letter of credit, payment in advance, factoring, forfeiting, correspondent bank, affiliate bank, correspondent bank, authorized signature, telegraphic test key, Drawer, drawee, payee, endorser, endorsee, prior parties, subsequent holders, acceptor, guarantor, holder, holder for value, holder in due course, bona-fide holder, bills of exchange, restricted order, demonstrative order, payable to bearer, tenor, sight bill, usance bill, payable on demand, payable after sight, delivery, actual delivery, constructive delivery, endorsement, presentation, acceptance, discharge of a bill, payment in due course, dishonor, protest, right of recourse, guarantee, accommodation party, accommodation bill, acceptance for honor supra protest, acceptor for honor, payment for honor supra protest, banker’s draft, trader’s bill, banker’s acceptance, trader’s acceptance, clean bill, documentary bill, promissory note, trader’s note, banker’s note, international money order, negotiable certificate of deposit, crossed cheques, certified cheque.

Chapter 3 Remittance 汇款

    Teaching Hours (课时): 2

    Main contents (主要内容)

    ; What is a remittance?

    ; Basic parties to a remittance;

; Types of remittance;

    ; Reimbursement of remittance cover;

    ; Application of remittance in international trade.

    Students are required to know what a remittance is, the basic parties to a remittance, the procedures of remitting funds, the types of remittance including M/T, T/T, and D/D, the ways of reimbursing covers between banks, and the usages of remittance in international trade.

    Glossary (词汇)

    Remittance, remitter, remitting bank, paying bank, payee, beneficiary, mail transfer, telegraphic transfer, demand draft, vostro account, nostro account

    Chapter 4 Collection 托收

    Teaching Hours (课时): 4

    Main contents?主要内容,

    ; What is a collection?

    ; Basic parties to a collection;

    ; Types of collection;

    ; Terms of releasing documents;

    ; Direct collection;

    ; Procedures of a documentary collection transaction;

    ; Banks’ liabilities and disclaimers under a collection;

    ; Financing provided by banks under a collection;

    ; Problems frequently arising from a collection.

    Students should understand the basic parties and their roles in a documentary collection transaction. Collections may take two forms: documentary collection and clean collection. The collection under international trade is usually documentary collection. In the collection instruction or order, the terms of delivering documents are defined. The terms consist of D/P, D/A, D/P after sight, and each will provide different protection to the exporter’s control in the title of the goods. It is very important to understand the detailed procedures of a documentary collection transaction. Also, if the banks just act as agent of their customers to help collect the money, there will be no risk for the banks to bear. But if the banks provide financing to the exporter or importer, it will be risky for them to provide such service, since the banks are faced with the credit risk of their customers. Different ways of financing are introduced and the frequently arising problems are discussed.

Cases studies (案例研究)

    Remitting Bank’s Failure to Act Exactly as Instructed by the Remitting Bank (代收行未完全执行

    托收指示案); Disputes Caused by D/A (D/A引起的纠纷案); Losses Caused by Exporters

    Unfamiliarity with the Importing Country’s Practice of D/P after Sight (对进口国远期D/P惯例

    不清致损案); Exporters Failure to Collect Funds under D/A (D/A收汇不着案).

    Glossary (词汇)

    Collection, financial documents, commercial documents, principle/drawer, remitting bank, collecting bank, presenting bank, drawee, clean collection, documentary collection, documents against payment (D/P), D/P at sight, documents against acceptance (D/A), negotiation

Chapter 5 Letter of Credit 信用证

    Teaching Hours (课时): 12

    Main contents ;主要内容;

    ; What is a letter of credit?

    ; Characteristics of a letter of credit;

    ; Parties to a letter of credit;

    ; Procedures of a documentary credit operation;

    ; Contents of a letter of credit;

    ; Examination of a documentary credit;

    ; Types of credit;

    ; Financing provided by banks under a credit transaction;

    ; L/C and other payment terms.

    The letter of credit is the most commonly used method of international settlement, so this chapter is the most important component of this course. First of all, students should know what an L/C is, its characteristics different from other payment terms, and complex parties involved in a credit transaction, including applicant for a credit, issuing bank, beneficiary, advising bank/transmitting bank, confirming bank, paying bank/accepting bank, negotiating bank, claiming bank, and reimbursing bank. Second, the procedures of a credit, the contents of a credit, and the examination of a documentary credit from the perspective of the advising bank or the exporter are explained. Third, the different types of credit are discussed extensively. At last, we explore the ways of

    financing by banks to its customers under a credit and the potential risks that banks will bear in providing such financing.

    Cases studies (案例研究)

    L/C Fraud (信用证欺诈); Legal Risks Related to Transferable Credit (可转让信用证的法律风

    ); Dishonor by Issuing Bank (开证行拒付案); A Case Relating to Negotiation (进口押汇担保

    ); Game Rules of L/C (信用证游戏规则); Documentary Credit Frauds and Prevention (跟单信

    用证常见的诈骗方法和防范); A Case on L/C issued without the Background of Trade (无贸易

    背景信用证案); Trap of L/C (信用证圈套)

    Glossary (相关词汇)

    Letter of credit, applicant, issuing bank, beneficiary, advising bank, transmitting bank, confirming bank, paying bank, accepting bank, negotiating bank, claiming bank, reimbursing bank, non-documental conditions, descriptions of the goods, period of presentation of documents, revocable credit, irrevocable credit, confirmed irrevocable credit, silent confirmation, sight payment credit, acceptance, usance credit payable at sight, deferred payment credit, negotiation credit, restricted negotiation credit, free negotiation credit, straight credit, anticipatory credit, red clause credit, packing credit, green clause credit, transferable credit, back-to-back, revolving credit, reciprocal credit, packing credit, credit line, trust receipt.

    Chapter 6 Standby Letters of Credit 备用信用证

    Teaching Hours (课时): 2

     Main contents (主要内容)

    ; What is a standby letter of credit?

    ; Difference between a standby l/c and a commercial l/c;

    ; Characteristics of a standby;

    ; Types of standby.

    Students should know what a standby letter of credit is. A standby letter of credit is different from a commercial letter of credit in several ways, which will be discussed in this part. The form of a standby letter of credit is a letter of credit, but in essence it is a guarantee. Even so, it may be subject to either of the two rules UCP600 and ISP98.

    Cases studies (案例研究)

Forged standby credit (伪造备用信用证案); Dishonor of standby credit (备用信用证拒付案);

    Revocation of standby credit (备用信用证撤销案); Installment of standby credit (分期支款的备

    用信用证).

    Glossary (词汇)

    Standby letter of credit, clean credit, performance standby, advance payment standby, bid bond/tender bond standby, counter standby, financial standby, direct payment standby, insurance standby, commercial standby.

    Chapter 7 Bank Guarantees 银行保函

    Teaching Hours (课时): 2

    Main contents (主要内容)

    ; What is guarantee?

    ; Basic parties to a bank guarantee;

    ; Direct and indirect guarantee;

    ; Types of guarantee;

    ; Contents of guarantee and counter guarantee;

    ; Procedures of a bank guarantee operation.

     This chapter is about bank guarantee. The URDG458 defines the demand guarantee while the URCG325 defines the contract guarantee. Basic parties to a bank guarantee, the difference between direct and indirect guarantees, and the types of guarantees are discussed in detail. Besides, the detailed clauses and provisions of a bank guarantee and a counter guarantee are explained.

    Cases studies (案例研究)

    Bid bond, performance guarantee, order and counter-guarantee.

    Glossary (词汇)

    Letter of guarantee (L/G), applicant/principal, beneficiary, guarantor, direct guarantee, indirect guarantee, tender guarantee/bid bond, performance guarantee, repayment guarantee, advance payment guarantee, maintenance guarantee, retention money guarantee, counter guarantee, aval.

Chapter 8 International Factoring 国际保理

Teaching Hours (课时数): 2

    Main contents (主要内容)

    ; Origin and evolution of factoring;

    ; Definition of factoring;

    ; Basic parties and procedures;

    ; Types of factoring;

    ; Services provided by the factor to the exporter;

    ; Legal framework for factoring;

    ; The role of factoring in international trade;

    ; Factoring and its prospects in China.

    Factoring can be used as a payment technique in international trade finance. The origin and evolution of factoring is traced first. Then the parties to a factoring and the procedures are discussed. Factoring may take different forms, including maturity factoring and financed factoring, disclosed factoring and undisclosed factoring, and single factoring and co-factoring. An international factoring is usually financed, disclosed and co-factoring. The factor provides various services to the exporter, including credit investigation, collection of proceeds, maintenance of sales ledger, credit risk protection, and payment on account. The legal framework and the roles of factoring are also talked about. At last, the use of factoring in China is examined. Cases studies (案例研究)

    Zhejiang Supor Cookware Co.: A Chinese Success Story; Kenmark’s Expansion into Australia;

    Austral Foods: A Visit from the President; From Anatolia to the World Major Automotive Manufacturers; Tex UK Ltd.; Manfred Peiner Rüren - und Stahlhandel GmbH., Germany:

    Factoring helps German steel exports.

    Glossary (词汇)

    International factoring, factors Chains International (FCI), General Rules for International Factoring, supplier, debtor, export factor, import factor, maturity factoring, financed factoring, disclosed factoring, undisclosed factoring, single factoring, co-factoring, credit investigation, collection of proceeds, sales ledger, risk protection, risk protection

Chapter 9 International Forfaiting 国际福费庭

Teaching Hours (课时): 2

    Main contents (主要内容)

    ; The evolution of forfaiting;

    ; The meaning of forfaiting;

    ; Procedures of forfeiting;

    ; Primary and secondary markets of forfeiting transactions;

    ; Forfaiting vs. other payment terms;

    ; Forfaiting in China.

    Students should know how forfaiting evolved, the meaning of foraiting, the basic parties to it, and the characteristics and documentation of forfeiting. The primary and secondary market of forfaiting transactions are discussed and compared between different countries. As a payment technique, the forfaiting is different from other payment techniques we discussed in prior chapters, especially the difference between a factoring and a forfeiting and the difference between forfaiting and invoice discounting are compared. Although it is new in Chinese banks, more and more Chinese banks have realized its importance as a profitable payment product and have started to provide such services for customers.

    Cases studies (案例研究)

    An UK Botplantco selling bottling machineary to a Czech Importer by using the services of a forfaiting bank; the difference between negotiation and forfaiting

    Glossary;词汇;

    Chapter 10 Documents 单据

    Teaching Hours (课时): 8

    Main contents (主要内容)

    ; General introduction;

    ; Drafts drawn under a letter of credit;

    ; Commercial invoices;

    ; Bills of lading;

    ; Insurance policies;

    ; Certificates of origin;

    ; Inspection certificate;

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