Acceptance of bill of exchange

Recognition of a legal obligation to pay the amount on a term bill of exchange at a specified future date (maturity date).

Open account trading and collections. The bill of exchange will be drawn on and accepted by the buyer.

Letters of credit. The bill of exchange will be drawn on and accepted by the Advising bank (or could be the Issuing bank) when it has checked the documents.

Advance payment

Trading method in which the buyer pays for the goods before they are despatched. Used where the buyer is of unknown creditworthiness and is unable to obtain a letter of credit.

(Also used as a matter of convenience for small orders).

Advising bank

Bank, usually in the seller's country, whose primary function is to authenticate the letter of credit and advise it to the seller.

The Advising bank MAY also take on other roles in the transaction, e.g.:

• confirm the letter of credit (confirming bank)
• accept a term bill of exchange (accepting bank)
• pay the seller upon presentation of documents (paying or negotiating bank)

Air waybill

Transport document used in air freight. Serves as a receipt for the goods and evidence of carriage contract.

Not a document of title and so not needed by the consignee in order to claim the goods from the carrier.

All risks insurance

Insurance covering risks set out in Institute of London Underwriters Cargo Clauses A.

Covers fire, theft, loss at sea, damage during loading, transhipment and discharge but NOT strikes, riots, civil commotion or war piracy.

Amendment

Variation in the terms or conditions of a collection or letter of credit.

An amendment to a letter of credit is issued by the Issuing bank under the direction of the applicant, and is advised to the Advising bank, following the same route as the original LC.

Applicant

Buyer/importer in a letter of credit transaction, who applies to the Issuing Bank for a letter of credit in favour of the seller (beneficiary).

May also be referred to as the accountee or accreditor.

Assignment

A banking arrangement between the beneficiary of a letter of credit and a third party - usually the supplier of the goods - who requires an assurance of payment.

Usually takes the form of a letter or deed of assignment.

The beneficiary of the credit is the assignor; part of the proceeds of the credit are irrevocably assigned to the assignee.

ASWP

Any safe world port

Avalisation

Payment undertaking given by a bank in respect of a bill of exchange drawn on a buyer. A way of giving security to the drawer of a term bill.

The bill is stamped with wording such as 'Pour aval' and signed by a representative of the bank.