IBT OUTLINE - IBT OUTLINE I International Sale of Goods a Risks in international context a.i Difficultiy ascertaining reputation and

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IBT OUTLINE I. International Sale of Goods a. Risks in international context a.i. Difficultiy ascertaining reputation and trustworthiness of seller a.ii. Increased time and expense to visit seller’s facory in china a.iii. Creditworthiness of buyer esp in developing countries a.iv. Greater risks of non-compliance a.iv.1. Due to long distance transport of goods a.iv.2. Risk making payment before inspection of goods returns are more difficult b. Responses b.i. To deal w/ expectation of parties, FOB, CIF, Negotiable bills of landing, nonnegotiable bill o flading letter of credit, confirmed letter of credit b.i.1. Terms are contained in International chamber of commerce’s international commercial terms and uniform customs and practice for documentary credit both of which can be adopted by parties via contract b.ii. To deal w/ risk of nonperformance: b.ii.1. Use documents that serve as title to goods b.ii.2. Documentary sale…delivery of documents constitutes symbolic delivery of goods and payment occurs on delivery of docs. b.ii.2.a. Buyer can then get legal control of goods and obtain physical possession of goods at port of importation by presenting docs to the carrier b.ii.3. Documentary sale involves three contracts b.ii.3.a. Sales contract b/t seller and buyer for the goods b.ii.3.b. Letter of credit b/t buyer’s bank and seller for payment b.ii.3.c. Bill of lading b/t seller and carrier which serves as contract for transportation of goods b.ii.3.d. Letter of credit not strictly necessary b.ii.3.d.i. Seller could submit docs directly to buyer for payment b.ii.3.d.ii. But seller might not wish to bear risk that buyer will not pay against docs c. Trade financing c.i. Bill of exchange AKA “draft” c.i.1. A written dated and signed commercial instrument involving unconditional order by a drawer c.i.2. Tha directs a drawee to pay certain sum to named payee c.i.3. Either on demand (sight bill) or by a specified date (time bill) c.i.4. Drawee has underlying obligation to pay money to drawer c.i.5. When drawee is holding drawer’s money on account, drawee will be some form of bank and bill of exchange is a check
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c.i.6. If drawee owes money to drawer as result of loan, bill is called a note c.i.6.a. Bill of exchange that is a note is a three party doc where the maker (promissory) of the note orders a third party to pay c.i.7. Where drawer has sold goods to drawee who owes the slae price, bill is called a trade acceptance c.i.7.a. Seller will be both drawer and payer. c.i.7.b. Bill of exchange will order the buyer (drawee) to pay $ (price of goods) c.i.7.c. Bill is presented to buyer usu with invoice bill of lading etc c.i.7.d. Buyer acceptes bill by signing it on its face and returning it to the seller or its angent c.i.7.e. Bill can then function as trade acceptance d. Sales contract d.i. Formed through negotiations leading to an offer by buyer and acceptance by seller. d.ii.
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This note was uploaded on 10/18/2011 for the course LAW 700 taught by Professor Kim during the Spring '10 term at USC.

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IBT OUTLINE - IBT OUTLINE I International Sale of Goods a Risks in international context a.i Difficultiy ascertaining reputation and

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