Chapter 4-Payment Documents

PAYMENT DOCUMENTS
Documents drives trade
Chapter 4-Payment Documents

Learning Objectives
LO1: Documents exchanged between partner

LO2: Documents exchanged between partner and their
bank

Bill of Exchange
LO 1
A bill of exchange is 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
determinable future time a sum certain in money to, or
to the order of, a specified person or bearer
(Bill of Exchange Act, 1882)

Bill of Exchange
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
(VN Law on negotiable instruments)

Contents of bills of exchange
1. The term ‘Bill of exchange' inserted in the body of the instrument
and expressed in the language employed in drawing up the
instrument;
2. An unconditional order to pay a determinate sum of money;
3. The name of the person who is to pay (drawee);
4. A statement of the time of payment;
5. A statement of the place where payment is to be made;
6. The name of the person to whom or to whose order payment is to
be made;
7. A statement of the date and of the place where the bill is issued;
8. The signature of the person who issues the bill (drawer).
(ULB 1930)
Contents of bills of exchange
No……… 1 BILL OF EXCHANGE
2 7
For ……… ………….., Date ……………
4
At ........sight of this FIRST Bill of Exchange (SECOND
6 the same tenor and date
being unpaid) Pay to the order of ………………………………. ……………………………
2
the sum of ……………………………………………………………………………………….…………
3
Drawn under ………………………………… ……………………………… …… …
3
To………………. Authorized signature
8

For L/C
BILL OF EXCHANGE
No……… ---- ,-----
For………
At ……………… sight of this FIRST Bill of Exchange (Second of the same tenor
and date being unpaid) Pay to the order of .…………………………… ………………
the sum of…………………………………………… ……… ……… …………… …………… ……
Value received as per our invoice (s) No(s) …………………………………………..
Dated ………………………………………
Drawn under …………………………………
Confirmed / irrevocable / without recourse L/C No ……………………………
Dated / wired ……………………………………
To ………………………… Authorized signature
…………………………………
L/C vs Collection
Drawer
Beneficiary
Drawee

Promissory note
Promissory note means a valuable paper created by an

issuer, undertaking to pay unconditionally a specific
sum upon demand or upon a fixed time in the future to
the beneficiary
(VN Law on negotiable instruments)

Contents of promissory notes
1. The term 'promissory note' inserted in the body of the

instrument and expressed in the language employed in drawing
up the instrument;
2. An unconditional promise to pay a determinate sum of money;
3. A statement of the time of payment
4. A statement of the place where payment is to be made
5. The name of the person to whom or to whose order payment is
to be made
6. A statement of the date and of the place where the promissory
note is issued;
7. The signature of the person who issues the instrument (maker).
Contents of promissory notes
PROMISSORY NOTE 1
6
No.:…………….. ………… , ……………
For:…………….. 2
3
At …… sight of this Promissory note, we promise to pay
5
to the order of…………… ……………………………… the sum of
……. …………………………………………………….
2
(name & signature of issuer)

Place of payment: …………(signature).……….
………………….. 4
7

Check/ Cheque
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 beneficiary.

CONTENTS OF CHEQUES
1.The term " cheque " inserted in the body of the instrument
and expressed in the language employed in drawing up the
instrument ;
2.An unconditional order to pay a determinate sum of money ;
3.The name of the person who is to pay (drawee) ;
4.A statement of the place where payment is to be made ;
5.A statement of the date when and the place where the cheque
is drawn ;
6.The signature of the person who draws the cheque (drawer).

Documents exchanged between
partner and their bank LO 2
• Payment order  remittance/ buyer

• Collection Order  collection/ L/C / seller
• Application for documentary credit  L/C / buyer
• Application for B/L endorsement  L/C/ buyer

MT MESSAGE GUIDE

MT 700
Tag Field name Status Format Definition
27 Sequence of total M 1n/1n the number of this message
and the total number of
messages in the series
40A Form of Documentary M 24x the type of credit
Credit
20 Documentary Credit M 16x Credit number assigned by the
Number issuing bank
23 Reference to Pre-Advice O 16x If the documentary credit
has been pre-advised.
31C Date of Issue O 6n Date: yymmdd
31D Date and Place of Expiry M 6n29x the latest date for Presentation
and the Place presented, >
Field 44C, NOTKNOWN
51A Applicant Bank O a or d

50 Applicant M 4*35x usually the buyer of the Letter
of Credit
59 Beneficiary M [/34x] usually the seller of the Letter
4*35x of Credit.
32B Currency Code, Amount M 3a 15d the currency code and amount
of the documentary credit.
39A Percentage Credit Amount O 2n/2n

Tolerance
39B Maximum Credit Amount O 13x
39C Additional Amounts O 4*35x For example, freight costs,
Covered interest, insurance.
41a Available with…by… M 4a 2a 2c 3c A (identifier code + code)
+ 14x
4*35x + D (name/ address + code)
14x Code: BY ACCEPTANCE| BY DEF
PAYMENT | BY MIXED PYMT | BY
NEGOTIATION | BY PAYMENT
42C Draft at… O 3*35x the tenor of drafts
Codes: SIGHT |
AFTER DRAFT DATE |
AFTER SHIPMENT DATE
42a Drawee O 1a/34x+4a A (party identifier + identifier
2a 2c 3c code)
1a/34x + D (party identifier + name
4*35x address)
42M Mixed Payment Details O 4*35x
42P Deferred Payment Details O 4*35x
43P Partial shipment O 1*35x Codes: Allowed/ Not Allowed
43T Transhipment O 1*35x Codes: Allowed/ Not Allowed
44A Loading on board/ Dispatch/ O 1*65x

Taking in charge at/from…
44B For transportation to… O 1*65x
44C Latest Date of Shipment O 6n yymmđ
44D Shipment period O 6*65x

45A Description of Goods and/or O 100*65x
Service
46A Documents required O 100*65x
47A Additional Conditions O 100*65x
71B Charges O 6*35x to specify charges to be borne

by the beneficiary.
48 Period of Presentation O 4*35x

49 Confirmation Instruction M 7x confirmation instructions for
the Receiver.
CODES: CONFIRM | MAY
ADD | WITHOUT
53a Reimbursement Bank O A/D

78 Instruction to the Paying/ O 12*65x
Accepting/ Negotiating
Bank
57a Advise Through Bank O A/ C/ D
72 Sender to Receiver O 6*35x
Information

Legend
M Mandatory
O Optional
a alphabetic, capital letters (A through Z), upper case

only
c alpha-numeric capital letters (upper case), and
digits only
n numeric, digits (0 through 9) only
x SWIFT X set:
• A to Z
• a to z
• 0 to 9
• / - ? : ( ) . , ’ + SPACE CrLf

L/C message
40A: Form of Documentary Credit

20: /Documentary Credit Number
31C: /Date of Issue:
31D: /Date and Place of Expiry:
51: /Applicant Bank
50: /Applicant
59: /Beneficiary
32B: Currency Code, Amount:
39A: Percent Credit Amount Tolerance
41D: /Available With .. By …
L/C message
42C: /Drafts at :
42D: Drawee:
43P: /Partial Shipment
43T: /Transshipment:
44A: /Loading on Board/Dispatch/Taking in Charge
At/From…Port:
44B: /For Transportation To:
44C: /Latest Date of Shipment
45A: /Description of goods and / or Services :
L/C message
46A: /Documents Required:

1. Signed Commercial invoice in one original and Three
copies quoting our L/C no. and date
2. Full set (3/3) of clean on board ocean bill of Lading made
out the order of ………….and notify ………….. and marked
freight pre-paid.
3. Certificate of inspection issued by Societe General De
Surveillance on quality, quantity, weight and supervision of
lading at load port in 3 original.
4. Certificate of Origin Issued by a chamber of commerce
from the country of origin
5. Packing List in three copies
L/C message
46A: /Documents Required:

1. Signed Commercial invoice in one original and Three
copies quoting our L/C no. and date
2. Full set (3/3) of clean on board ocean bill of Lading made
out the order of ………….and notify ………….. and marked
freight pre-paid.
3. Certificate of inspection issued by Societe General De
Surveillance on quality, quantity, weight and supervision of
lading at load port in 3 original.
4. Certificate of Origin Issued by a chamber of commerce
from the country of origin
5. Packing List in three copies
L/C message
71B: CHARGES
+ ALL BANKING CHARGES OUTSIDE VIETNAM,
AMENDMENT, DISCOUNT AND
REIMBURSEMENT CHARGES ARE FOR
BENEFICIARY’S ACCOUNT.
+ ALL ADVISING BANK’S CHARGES SHOULD BE
COLLECTED FROM BENEFICIARY BEFORE
RELEASE OF L/C TO THEM.

L/C message
48: /Period for Presentation:

DRAFTS AND DOCUMENTS MUST BE PRESENTED FOR
NEGOTIATION WITHIN 27 DAYS FROM B/L/DATE BUT
WITHIN THE VALIDITY OF THE CREDIT
49: /Confirmation Instructions :
53A: Reimbursing Bank
78: /Instructions to Paying / Accepting / Negotiating
Bank :
57A: Advise through Bank
72: Sender to receiver Information
(END OF MESSAGE)
Ví dụ
47A: ADDITIONAL CONDITIONS
+ EACH SHIPMENT MUST BE INCLUDED: 7 MTS OF L
GRADE AND 10 MTS OF S GRADE IN 01 FCL
+ THIRD PARTY’S DOCUMENTS ACCEPTABLE
+ CONFIRMATION CHARGE AT BENEFICIARY’S ACCOUNT
+ ALL DOCUMENTS FOR NEGOTIATION MUST BE ISSUED
IN TRIPLICATE (UNLESS OTHERWISE STATED) AND
QUOTED OUR CREDIT NUMBER
+ CHARTER PARTY BILL OF LADING ACCEPTABLE.

Ví dụ
72: SENDER TO RECEIVER INFORMATION
+ THIS L/C IS SUBJECT TO UCPDC 1993 REVISION ICC
PUB.NO.600
+ PLEASE RELEASE THIS ORIGINAL CREDIT AND ITS
AMENDMENT (IF ANY) ONLY AFTER YOU COLLECT YOUR
ADVISING FEES FROM THE BENEFICIARY.
+ PLEASE SEND US YOUR ACKNOWLEDGEMENT OF
RECEIPT BY MT730.
+ ALL OTHER TERMS AND CONDITIONS REMAIN
UNCHANGED.
+ THIS IS AN OPERATIVE AMENDING INSTRUMENT.
+ PLEASE NOTIFY THE BENEFICIARY.
INSURANCE
• CIF/CIP: Do seller -> Policy

• FOB/CFR: Do buyer
+ I= R*V=R*100 CIF/CIP
+ ICC A/B/C

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PAYMENT DOCUMENTS

Documents drives trade