Under a ____, the exporter is paid once shipment has been made and the draft is presented to the buyer for payment; under a ____, the exporter provides instructions to the buyer's bank to release shipping documents against acceptance, by the buyer, of the draft.

Question

Quizplus · Accepted Answer

- A "sight draft" is a draft that is payable on demand, meaning the buyer must pay as soon as they receive the draft and the shipping documents. This is also known as "documents against payment" (D/P) since the documents are released to the buyer only after they have paid.
- A "time draft" is a draft that is payable at a future date, such as 30, 60, or 90 days after acceptance. This is also known as "documents against acceptance" (D/A) since the documents are released to the buyer once they have accepted the draft and committed to paying at a later date.
- A "banker's acceptance" is a type of time draft that is guaranteed by a bank, making it more secure for the exporter. The exporter provides shipping documents to their bank, which creates a draft that includes the buyer's acceptance of the terms. The bank then "accepts" the draft and guarantees payment on the future due date.
- A "bill of lading" is a document that confirms receipt of goods by a carrier and outlines the terms of the shipment. It is not a type of draft.

Therefore, the best choice is A, as it describes the two types of drafts mentioned in the question prompt.

Under a ____, the Exporter Is Paid Once Shipment Has