MARK 493 Lecture Notes - Lecture 8: Import, Commercial Invoice, The Seller

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The risk or non-payment in international contracts is higher than in domestic contracts. The buyer in canada might not trust the seller in mexico, and vice versa. There are different laws, different jurisdictions, different languages, and different courts. The exporter (seller) usually requires that the importer (buyer) arrange for a letter of credit (l/c) to provide greater security for payment of goods and services. Once the l/c has been submitted, the other party has to approve the terms, which usually includes: parties involved, proof that funds have been made available to the bank, product description (cid:523)what"s being shipped(cid:524) An l/c is a written undertaking by an importer"s bank to an exporter"s bank that a payment will be made provided that specific terms and conditions are met. General agreement you go to your bank here in canada. They will undertake making this payment on my behalf to the seller, providing that certain conditions are met.

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