Instruments of International Payment: Lecturer: Msc. Trang Pham

CHAPTER 2
INSTRUMENTS OF
INTERNATIONAL
PAYMENT
Lecturer: MsC. Trang Pham

2.1 Bill of exchange
Chapter outline 2.2 Cheque
2.3 Promissory note

2.1.1 Definition
BEA 1882 ULB 1930 A/CN9/221 Ordinance No Law No.
Bill of Uniform International 17/1999/PL- 49/2005/QH11 of
Exchange Law for Bills of Exchange UBTVQH10 on November 29,
Act of 1882 Bills of and Promissory Commercial 2005,
Exchange Notes, Bills on Negotiable
Documents
instruments.
1882 1930 1982 1999 2005

2.1.1 Definition
The Bills of Exchange Act 1882 (England) defines a
“bill of exchange” as an unconditional order in writing,
addressed by one person to another, signed by the
person giving it, requiring the person to whom it is
addressed to pay on demand or at a fixed or
2.1 Bill of determinable future time a sum certain in money to or
to the order of a specified person, or to bearer.
exchange According to Law on Negotiable instruments, a bill of
exchange means a valuable paper created by a drawer,
requesting the drawee to pay unconditionally a specific
sum upon demand or upon a fixed time in the future to
the beneficiary. .
2.1.1 Definition
Unconditional order to
Drawer pay Drawee
(Exporter) (Importer/Issuing bank)
Pay
Beneficiary
NYC Co., Ltd
2.1 Bill of exchange 2.1. HỐI
Vinafood PHIẾU
Bill of exchange
2.1.1 Definition
BILL OF EXCHANGE
No: 01/XK Hanoi, September 10, 2020
For: USD 290,000.00
2.1 Bill of exchange At 90 days after sight of this FIRST of exchange (Second of the same tenor and date being unpaid). Pay to
the order of Vietnam Eximbank, Hanoi Br., the sum of US DOLLAR TWO HUNDRED AND NINETY
THOUSAND ONLY.
Drawn under Contract no. 2020/09 dated Aug 28, 2020.
2.1.1 Definition To: NYC Co., Ltd For and on Behalf of VINAFOOD(Hanoi, VN)
NewYork, US Authorized Signature (Signed)
Independent Compulsory Negotiable

2.1.2 Format and contents

2.1.2.1 Format
• The bill must always be in writing (hand-writing, typewriter or printing). What the bill is
actually written on, or written with, is not important.
• The bill of exchange may be issued in two or more identical copies.
• The bill should be drawn only in one language.
2.1 Bill of 2.1.2 Format and contents
Exchange 2.1.2.2 Contents
BILL OF EXCHANGE 1
No.:……………….
2
For :…………………. .................., .........7..........................
At……4………sight of this first Bill of exchange (second of the same tenor

and date being unpaid) Pay to …… 6……….the sum of……… 2 ………..
To: 3 (Name and address of Drawer)
………………………………… …………(Signature) …………
………………………………..
5 8
Place of Payment:…………….
………………………………….
BILL OF EXCHANGE 1 7
No: 01/XK Hanoi, September 10, 2020
For: USD 290,000.00 2
1.Title;
4 sight of this FIRST of exchange (Second of the same tenor and date being unpaid). Pay
At 90 days after
6 Eximbank, Hanoi Br., the sum of US DOLLAR TWO HUNDRED AND
to the order of Vietnam 2. An unconditional order to pay a
NINETY THOUSAND ONLY. 2
determinate sum of money;
Drawn under contract no. 2020/09 dated Aug 28, 2020.
3. Drawee;
To: NYC Co., Ltd 8 (Hanoi, VN)
For and on Behalf of VINAFOOD
3&5
NewYork, US Authorized Signature (Signed) 4. The time of payment;
5. The place where payment is to be
made;
6. Payee/Benificiary;
HỐI PHIẾU 1 7 7. Date and Place of Issue;
No: 01/XK Hà Nội, ngày 10 tháng 9 năm 2020 8. Drawer
2
Số tiền: USD 290,000.00
Sau 90 ngày kể4 từ ngày nhìn thấy bản thứ nhất của hối phiếu này (bản thứ
6 2 cùng
ngày tháng không trả). Trả theo lệnh của Ngân hàng TMCP Xuất Nhập khẩu Việt
Nam, chi nhánh Hà Nội số tiền HAI TRĂM CHÍN MƯƠI NGHÌN2 Đô la Mỹ chẵn.
Ký phát theo theo hợp đồng số 2020/09 ngày 28 tháng 8 năm 2020.
Gửi: Công ty TNHH NYC Công ty Vinafood
3&5
NewYork, Mỹ Hà Nội, Việt Nam
8
The Drawer
2.1 Bill of The Drawee

exchange The Payee
2.1.3 Parties of a bill The Endorser
of exchange
The Endorsee
The Acceptor
The Holder
2.1.4 Acceptance of bill of exchange
Meaning
Form and Contents

2.1.5 Transfer of bill of exchange
Meaning
Form and
Contents
Types
2.1.5 Aval of bill of exchange
Meaning •.
Form and
Contents
2.1.5 Recourse due to non-acceptance or non-payment of bills of exchange
Meaning
Form and
Contents
2.1 Bill of 2.1.6 Types of Bill of Exchange
exchange
2.2 Cheque
2.2 Cheque
2.2.1 Definition
• Cheque means a valuable paper created by a drawer, ordering the payer being a
bank or an organization providing payment services, which is licensed by the State
Bank of Vietnam, to pay a fixed sum from its account to the beneficiar (Law on
Negociable Instruments 2005).
• Cheque is a written order from one party (the drawer) to another (the drawee,
normally a bank) requiring the drawee to pay a specified sum on demand to the
drawer or to a third party specified by the drawer (CPSS Glossary - March 2003).
2.2 Cheque
Parties involved
• Drawer:
• Drawee:
• Beneficiary:
2.2 Cheque
2.2.1 Definition
2.2 Cheque
2.2.1 Defination
Contents of a cheque (LONI, 2005)
(a) The word "Cheque" printed on the top of the cheque;
(b)A fixed amount of money;
(c) The name of a bank or of an organization providing payment services being the drawee;
(d) The name of the beneficiary being an organization or the full name in the case of the beneficiary being an
individual who is designated by the drawer or in favour of whom [the drawer] has made the request for payment
of the cheque to the order of the beneficiary or the request for payment of the cheque to the bearer .
(dd) The place for payment;
(e) The date of drawing;
(g) The name of the drawer being an organization or the full name in the case of the drawer being an
individual, and the address and signature of the drawer.
2.2 Cheque
2.2.2 Classification
• By transferable ability
 Bearer cheque
 Order cheque
 Nominal cheque
2.2 Cheque
• By format
 Crossed check : Generally crossed cheques and Specially crossed cheques
Non - crossed cheques

2.2 Cheque
By purpose By payable ability

 Transferable cheque  Certified Cheque
 Cash drawing cheque  Non - certified Cheque
 Cash cheque
 Traveler's cheque
2.2 Cheque
2.2.3 Process
2.3
Promissory
note
2.3 Promissory note
• The Bills of Exchange Act 1882 (England)

defines a promissory note as an unconditional
promise in writing made by one person to
another signed by the maker, engaging to pay,
on demand or at a fixed or determinable
future time, a sum certain in money, to, or to
the order of, a specified person or to bearer.
2.3
Promissory
note
Discussion Question
Case study 1: On September 1 2020, Generalexim company signed a contract No. 0023/EX-JP to export frozen seafood to
Marubeni Co.Ltd address at No.1 Chome, Tokyo, Japan.
• Quantity: 12,000Kg ±5%,
• Unit price: 15USD/Kg - FOB Haiphong
• Payment term: Irrevocable letter of credit at sight.
On September 15 2020 Marubeni Co.Ltd requested Mitsubishi Bank, Tokyo branch to issue LC No. ILC00013437MB in
favor of Generalexim No.1 with a value not exceeding USD 165,000. Generalexim No.1 must present documents at
Mitsubishi Bank before October 21, 2020.
On September 30 2020, Generalexim No.1 delivered 11,500kg according to the terms and conditions of the signed contract.
• Requirement: Draw a bill of exchange according to the above situation.
Discussion Question
Case study 2: On September 1 2020, Generalexim company signed a contract No. 0023/EX-JP to export frozen
seafood to Marubeni Co.Ltd address at No.1 Chome, Tokyo, Japan.
• Quantity: 12,000Kg ± 5%,
• Unit price: 15USD/Kg - FOB Haiphong,
• Payment term: D/P
On September 30 2020, Generalexim No.1 delivered 11,500kg according to the terms and conditions of the
signed contract. The seller entrusted the collection of the payment to Vietcombank, Cau Giay branch (remitting
bank). After that, Vietcombank sent the documents and, together with the collection instruction), to the
Mitsubishi Bank, Tokyo branch (collecting bank) to entrust the collection of the payment.
• Requirement: Draw a bill of exchange according to the above situation.

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CHAPTER 2

Lecturer: MsC. Trang Pham

Chapter outline 2.2 Cheque

2.3 Promissory note

1882 1930 1982 1999 2005

Independent Compulsory Negotiable

2.1.2 Format and contents

Exchange 2.1.2.2 Contents

At……4………sight of this first Bill of exchange (second of the same tenor

2.1 Bill of The Drawee

2.1.4 Acceptance of bill of exchange

Form and Contents

2.1.5 Transfer of bill of exchange

2.1.5 Aval of bill of exchange

2.1.5 Recourse due to non-acceptance or non-payment of bills of exchange

 Crossed check : Generally crossed cheques and Specially crossed cheques

Non - crossed cheques

By purpose By payable ability

• The Bills of Exchange Act 1882 (England)

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