Suppose at your factory you produce thousands of Ipods daily. After some research you realize that Europe has a huge market for Ipods and you want to sell your Ipods to buyers whom you have never met or dealt with before in Europe.
How do you sell your products internationally to unknown buyers while protecting your legal interests? The Answer is the International Documentary Sales Transaction. The International Documentary Sales transaction can be broken into several steps, as outlined below. The transaction can be rather complex so it is always a good idea to have an attorney draft the necessary paperwork and oversee the process. The actors involved in the transaction are a Seller, Seller’s Bank, Buyer, Buyer’s Bank, and the Carrier.
1. First, the Seller and Buyer sign a sales contract wherein the Seller agrees to sell certain goods to the Buyer.
2. The Buyer’s Bank sends a letter of credit to the Seller.
3. The Seller’s bank confirms the letter of credit.
4. The Seller then furnishes the goods to the Carrier, and the Carrier gives the Seller a Bill of Lading.
5. The Seller sends the bill of lading and the draft to the Seller’s Bank and the Bank in turn pays Seller.
6. The Seller’s Bank sends the Bill of Lading and Draft to the Buyer’s Bank, and the Buyer’s Bank sends payment to the Seller’s Bank.
7. The Buyer’s Bank sends the Bill of Lading and the Draft to the Buyer and the Buyer pays the Buyer’s Bank.
8. The Buyer then provides the Carrier with the Bill of Lading and the Carrier gives the goods to the Buyer.