They arranged that they would be picked up in the afternoon at 12.30 to be in time for the meeting on the firm's premises at one o'clock.

Mr Cramer: "Good afternoon, gentlemen. Let me introduce my col­leagues: (Mr C.) Mr Andrew Crown, my Deputy and Mr Simon Carrington, our

senior engineer." Balashov: "How do you do?", (B.) A. & P. "How do you do?" Mr Crown (Mr Cr.) and Mr Carrington "How do you do?" (Mr Car.)

B.:"I'm happy to meet you, gentlemen." Mr С & Car. "Nice to meet you." Mr C.: "Sit down, please, and make yourselves comfortable. Are you

all right after your long journey?"

A.:"Oh quite. Actually the flight was very nice."

B.:"As to me since it was a night flight, I slept most of the time, so

I'm as fresh as a cucumber now and ready tor the talks." Mr С: "That's good. Shall we start with coffee or get down to

business straight away?" B.: "Perhaps we'll start the talks and have coffee a bit later. We've just

had our lunch, you know." Mr С "As you like. (It's up to you.) Your wish is a must - you're our

guest. What shall we start with?"

"You've seen our Tractors T-40/047 in operation, haven't you?" Mr С "Yes, we have. And we are more or less satisfied with their

performance."

В.: "I'm glad to hear that. Perhaps we'll start with the price and the terms of delivery? Would you like us to quote а с i f or an fob I price?" Mr C.: "As a matter of fact we've got your price-list here. Is it the

latest?"

"Let me have a look. Yes, it's our latest price-list. You seem to be well equipped for the talks, and what's your opinion?" Mr C: "I tried to do my homework as well as I could. As to my opinion since you've got a liner from Leningrad to Montreal, I suppose you'd prefer с i f prices." В.: "Yes, you've quite right there. And it's our usual practice to say

the least."

Mr C: "Is your price subject to a discount?"

В.: "If you mean a trade discount, we don't have it in our practice, but if you order a great number of tractors or pay in cash, then you're granted a discount." Ir C.: "Oh I see. And what do you consider "a great number"?"

"Over 75 tractors, let's say." Ir C: "What discount will it be then?"

"Well, Mr Cramer, perhaps we'll come down from theoretical discussion to the ground. I wish you would name the exact number of tractors you require and we'll go on from there."

To the Eporter because it does not give any guarantee that he willreceive payment in time or at all. That’s why the Exporter usuallyrequires that the Importer presents a guarantee of a first class bank

For collection (Payment for collection does not give any advantages

Mr C: "All right, Mr Balashov, we're going to order, say, 100 tractors

if the price's reasonable."

В.: "In that case we'll give you a 25 % discount." Mr C: "Could it be 35 %, Mr Balashov?" В.: "That's a bit too much. We'll meet you half-way, though, and

make it 30 %, Mr Cramer, but that's final." Mr C: "I agree."

В.: "Shall we consider the price problem settled?" Mr C: "Yes, it's а с i f price Montreal, i.e. $ 11.000, with a 30 % discount, which will make it - $ 7.700 per unit. A good beginning makes a good ending, doesn't it?" В.: "You're quite right. Well begun is half done,as they say. Shall we

call it a day then?" Mr C: "Yes, and you know, Mr. Balashov, your English is very good.

I wish I knew Russian as well." В.: "Thank you" for the compliment. I understand we'll be meeting

tomorrow morning at 10. Goodbye!" Mr C: "See you tomorrow morning at 10." All the others: "So long", "See you tomorrow."

TEXT 6 B. TERMS OF PAYMENT

Payment in foreign trade may be made in cash and on credit. There are different methods of cash payment:

1. By cheque (but it is not practicable as a cheque is payable in the
country of origin and its' use is time-wasting to say the least. That's
why cheques are mostly used for payment in home trade.)

2. By telegraphic or telex transfers or post (mail) remittance which is
made from the Buyers' bank account to the Sellers' in accordance
with the Buyers' letter of instruction. Actually this method of cash
payment may sometimes take several months, which is naturally
very disadvantageous to the Sellers. The transfer is carried out at
current rates of exchange.

3. By letter of credit (or just by credit) - L/C - (In our commercial
practice the following types of letters of credit are usually used:
irrevocable, confirmed "and revolving. An irrevocable L/C is one
which can neither be modified nor cancelled without the consent* of
the party in whose favour it has been opened. A confirmed L/C is
an irrevocable L/C, payment under which is guaranteed by a first
class bank in case the opener of the L/C (i.e. the Buyers) or the
bank effecting payment defaults, or is unable to make payment. A
revolving L/C is one under which its value is constantly made up to
a given limit after payment for each shipment, which saves the
charges on multiple letters of credit.)

The Letter of Credit is the most frequently used method of cash payment because it is advantageous and secure both to the- Exporter and to the Importer though it is more expensive than payment by transfer. It overcomes the gap between delivery and payment and gives protection to the Sellers by making the money available for them on the fulfilment of the transaction and to the Buyers because they know that payment will only be made against shipping documents ' giving them the title for the goods. This method or payment is often used in dealings with developing countries.

that payment will be effected in due time. Also, there is a long period of time between the delivery of the goods and actual payment. But it is advantageous to the Importer because there is no need to withdraw from circulation big sums of money before actually receiving the goods).

Payment for collection against documents (with subsequent ac­ceptance or very often telegraphic collection with subsequent acceptance) is mostly used in trade with East European countries. The costs involved in effecting payment for collection are twice or three times lower than those by fetter of credit. Most modern business is done on a credit basis which may be: 1) by drafts (by Bills of Exchange - B/E) - the Exporter credits the Importer which is advantageous to the latter. A draft (a bill of exchange) is an order in writing from a Creditor to a Debtor to pay on demand or on a named date a certain sum of money to a company named on the Bill, or to their order. It is drawn by the Sellers on the Buyers and is sent through a bank to the Buyers for acceptance (i.e. for acknowledging the debt). The draft becomes legally binding when signed and dated by the Buyers on its face (front) and is to be met when due, i.e. 30, 60 or 90 days after presentation. The draft, may be negotiable, i.e. it may be used by the Sellers to pay their own debts, but in this case the Sellers are to endorse it by signing it on its back, then they can pass it on to the new holders. If the exporter wants immediate payment, he can discount the draft In return for a cash advance with a bank for a commission, i.e. sell it to ■ bank for its face value less interest, and by supplying a document (a letter of hypothecation) giving the bank the legal right to claim the goods if necessary. Besides, he may leave it with a bank as security for ft loan. All this makes the Draft a very practical method of payment in foreign trade. To sum up its advantages one should say that it llmplifies the financing of export and import foreign trade and cuts (town innumerable movements of currency. There may be two main types of drafts:

Sights Drafts, which are payable on presentation (at sight) or on acceptance and

Term Drafts,

2)

which are drawn at various periods (terms) and are payable at a future date and not immediately they are accepted. Term drafts may pass through several hands before maturity and require endorsement by the Sellers.

in advance (the Importer credits the Exporter, for example, the contract may stipulate a 10 or 15 % advance payment, which is advantageous to the Sellers). This method is used when the Buyers are unknown to the Sellers or in the case of a single isolated transaction or as part of combination of methods in a large-scale (transaction) contract.

on an open account. Open account terms are usually granted by the Sellers to the regular Buyers or customers in whom the Sellers have complete confidence, but sometimes they are

 

Granted when the Sellers want to attract new Buyers then they risk their money for that end. Actual payment is made monthly, quarterly or annually as agreed upon. This method is disadvantageous to the Exporter, but may be good to gain new markets.

The two methods of payment (in cash and on credit) are very often combined in a contract. Drafts, for example, may be presented under a Jettei of credit and there may be other, sometimes very complicated combinations of various methods of payment stipulated in a contract.