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1.
What is Seller's Risk ? |
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Seller's Risk is issued to an exporter to
cover non-payment or delayed payment by buyers
abroad due to Commercial and Non Commercial
Risks. |
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2.
What are Commercial Risks? |
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Commercial
risks are : |
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Insolvency
of the buyer |
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Failure
or refusal of the buyer to pay the Gross Invoice
value or part thereof within four months of
the Due Date |
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Refusal
or failure of the buyer to accept the goods
or services in terms of the contract of sale.
(Non Acceptance by the buyer) |
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3.
What are Non Commercial Risks? |
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Non
Commercial risks are the risks associated
with foreign exchange transfer delays or blockage,
import prohibitions, cancellation of valid
import licenses, diversion of voyage, war,
civil commotion or other disturbances in the
buyer’s country. |
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4.
How can an exporter obtain SELLER'S RISK from
SLECIC? |
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The
exporter can obtain Seller's
Risk from SLECIC by submitting a duly
completed Policy
Proposal and Credit
Limit Application to SLECIC.
Generally the exporter has to submit all
the buyers in order to spread the risk.
However, if the exporter requests to cover
only a specific transaction/s Specific
cover is available. |
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5. |
What are the terms of payment in international
trade and how does it relate to the risks? |
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Terms
of Payment |
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Associated
Risks |
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Letters
of Credit (L/C) |
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An
undertaking by a bank issuing the Letter of
Credit (the Issuing Bank) to pay the beneficiary
of the Credit a stated amount on submission
of stipulated documents in conformity with
the terms and conditions of the Credit |
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Non
Commercial Risks |
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Documents
Against Payment (D/P) |
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The
process of delivering documents required by
a buyer to take possession of the goods after
receiving payment for drafts by the bank who
is authorized to handle the documents |
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Commercial
and Political risks |
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Cash
Against Documents (CAD) |
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A
process similar to D/P with payment being
made for documents without the involvement
of a draft |
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Commercial
and Non Commercial Risks |
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Documents
Against Acceptance (D/A) |
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The
process of delivering documents required by
a buyer to take possession of the goods after
obtaining the acceptance of drafts by the
Bank who is authorized to handle the documents |
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Commercial
and Political risks |
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Open
Account (O/A) |
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The
procedure where a seller extends a period
of credit to a buyer to make payment for goods
not supported by any specific document of
indebtedness other than the contract of sale |
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Commercial
and Non Commercial Risks |
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6. |
Can
exporters of services obtain credit risk cover
under the Seller's Risk ? |
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Yes.
Under the Seller's Risk for Services, exporters
of services such as software, construction
etc. can cover the credit risks of the services
provided. |
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