Lives and Livelihoods

There are circumstances where a term bill is employed and where the buyer requires some time after effective import to arrange a sale, when it might be desirable to retain title to, and control of, the goods until final payment. The documents would then be forwarded on a D.O.P. basis and the bill presented for acceptance in the normal manner, but the documents would be released only on payment at or before the maturity date of the bill. In the interim, the correspondent bank would be required to arrange for the warehousing and insurance of the goods, if necessary.

In practice, there are many risks that must be considered. The first is, of course, the refusal or inability of the buyer, for a variety of reasons, to pay for the shipment. In the case of dishonor of a sight bill by non-payment or a tem bill by non-acceptance, warehousing and insurance of the goods are usually involved, with the possibility of subsequent return shipment or disposal to another buyer at substantial expense and loss in value. Where the documents are released on acceptance of a term bill which is dishonored by non-payment at maturity, the situation could be even worse. The buyer gains possession of the goods. Acceptance, but this establishes only his obligation, not his ability,______. At maturity of the bill, non-payment may be accompanied by the appearance of the goods into the hands of third parties and the only source is through expensive litigation abroad. On other occasions, even the buyer is able and willing to pay, interim action by his own government. The imposition of exchange restrictions might prevent his making payment.