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Glossary of Trade Terms
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AAR
Against all risks.
Acceptance (also, acc.)
The agreement written on a draft and signed by the drawee - who becomes the acceptor - to pay the specified amount on the due date. The term is also applied to the accepted time draft itself.
Acceptance Credit
A documentary credit which requires, amongst the documents stipulated, provision of a term bill of exchange. The bill is then generally accepted by the bank on which it is drawn or discounted. The practical result is that the beneficiary is paid promptly at a discount.
Acceptor
The person who accepts a bill of exchange drawn on them. Until they accept, they are called the drawee. By accepting the bill the acceptor undertakes to pay the person presenting the bill the face value of that bill. On payment the acceptor retires the bill. Where the acceptor is the initial provider of the credit, by arrangement, on maturity of the bill, they require the borrower to place their funds on an amount equivalent to the face value of the bill.
Ad valorem Duty
A duty assessed as a percentage rate of the value of the imported merchandise.
Advance Clause Credit
These credits incorporate a clause which authorises the advising bank to make an immediate payment to the beneficiary of an amount up to the total of the credit, or some lesser nominated amount. The Advance clause facility may in some instances stipulate that the advance is to be made against production of specified documents (e.g. storage warrants, insurance cover note), but more often is not subject to any special conditions.
The advance facility thus authorises the beneficiary to draw up to the amount specified prior to producing the relative export shipping documents. In effect it enables the beneficiary to obtain an overdraft from the advising bank, guaranteed by the buyer's bank, and to repay the loan with the proceeds of the drawing(s) made in terms of the credit.
Advance Payment Guarantee / Bond
This is a guarantee that advance payments will be returned if the party having received such payments does not perform its part of the contract.
Advice of Fate
A request for advice of payment/non-payment (acceptance/non-acceptance) of a bill of exchange.
Advising Bank
The bank that notifies or advises the exporter that a credit has been opened in the exporter’s favour. The advising bank, usually located in the exporter’s country, fully informs the exporter of the conditions of the documentary credit without itself making a payment commitment.
After Date
Payment on a negotiable instrument, such as a bank draft, becomes due a specified number of days after presentation of the draft.
Agent / Agency Agreement
An agent is an independent person or legal entity which acts on behalf of another (the 'principal'). In international transactions, generally refers to a sales representative who prospects on behalf of a foreign principal, earning commission on sales eventually concluded between the principal and the ultimate client. To be distinguished from sales through employees and subsidiaries - who are not independent, or through distributorship relations, which involve the distributor's buying and re-selling in their own name. Sales agents should also be distinguished frombuying or purchasing agents, as the respective rights and obligations are quite different.
Air Waybill (also airbill or AWB) Agreement
A non-negotiable shipping document used by the airlines for air freight.It is a contract for carriage that includes carrier conditions, such as limits of liability and claims procedures. In addition, it contains shipping instructions to airlines, a description of the commodity and applicable transportation charges.It performs the functions of a bill of lading in land surface transport.
All Risks (AR)
A type of insurance coverage providing somewhat more than the minimum coverage, at a premium above the base amount paid under a particular policy. Unfortunately, all risks coverage does not in fact cover all risks - thus, for example, coverage of war, riots and strikes is not usually included; moreover, there is no standard nomenclature for all risks coverage.Traders should understand what exactly is covered in all risks coverage, and decide whether or not they need additional coverage, before agreeing to such a term.
Applicant
In the documentary credit process, normally the buyer or importer, who applies (thus, the applicant) for a documentary credit in favour of the beneficiary, the seller.
Appreciation
A rise in the value of a currency in terms of foreign currencies.
Arbitrage
Simultaneous buying and selling of foreign exchange for the sake of realising profits from discrepancies between exchange rates prevailing at the same time in different countries, or between forward margins for different maturities, or between interest rates prevailing at the same time in different centres or in different currencies.
Arbitration
A process of dispute resolution in which a neutral third party (arbitrator) renders a decision after a hearing at which both parties have an opportunity to be heard. Arbitration may be voluntary or contractually required. The advantages of arbitration - compared to litigation - are neutrality, confidentiality, reduced costs, faster procedures and the arbitrator's expertise. Internationally, the main arbitration body is the International Chamber of Commerce, other arbitration institutions include the London Court of International Arbitration, the Stockholm Court of Arbitration, and the American Arbitration Association (AAA).
ATA Carnet
'Admission Temporaire/Temporary Admission'. An international customs document for the temporary duty-free admission of goods into a country for display, demonstration or similar purposes. ATA Carnets are issued by National chambers of commerce, which guarantee the payment of duties to local customs authorities should the goods not be ultimately re-exported.
Aval
A bank's guarantee to pay a bill of exchange. An irrevocable, unconditional promise to pay on the due date. The use of avals is common in the practiceof forfaiting.
AWB
A non-negotiable shipping document used by the airlines for air freight.It is a contract for carriage that includes carrier conditions, such as limits of liability and claims procedures. In addition, it contains shipping instructions to airlines, a description of the commodity and applicable transportation charges.It performs the functions of a bill of lading in land surface transport.
 
 

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  • Agricultural and Processed Food Products Export Development Authority (APEDA)
    (Ministry of Commerce & Industry, Govt. of India)

  • NCUI Building 3, Siri Institutional Area, August Kranti Marg, New Delhi - 110 016
    Phone : 91-11-41486013, 20863919, 20867008, 20867007