Because importers and exporters assume different risks,the most preferred way to conduct business and minimize these risks is:

Question

Quizplus · Accepted Answer

Documentary sale involves the use of shipping and financial documents to ensure that both parties fulfill their obligations. The exporter ships the goods and provides the necessary documents, including a bill of lading and commercial invoice, to the importer's bank. The bank releases the documents to the importer only after they have paid or accepted a financial obligation, which mitigates the risk for both parties. This method is thus preferred as it minimizes the risks perceived by both importers and exporters. The other options, cash in advance and open account, are less preferred as they place an unequal burden of risk on either party.

Because Importers and Exporters Assume Different Risks,the Most Preferred Way