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Question

Difficulty: MediumCommercial Documents in Foreign Trade

A Nigerian exporter draws a written, unconditional financial order requiring an overseas buyer to pay a specific sum of money either on demand or at a predetermined future date. Which commercial document in foreign trade does this describe?

  1. Bill of ExchangeAnswer
  2. B
    Certificate of Origin
  3. C
    Advice Note
  4. D
    Balance of Payments

Answer

Bill of Exchange
A Bill of Exchange is an unconditional order in writing, addressed by an exporter to an importer, requiring the importer to pay on demand or at a fixed future time a specified sum of money. It serves as a key instrument of payment and credit in international trade.

Step-by-Step Solution

1
Identify the primary function of the document described in the scenario
The document acts as a financial order requiring payment of a specified sum at sight or at a future date.
In international trade, credit and payment settlements between buyers and sellers in different countries are routinely executed using negotiable drafts.
2
Match the description to standard foreign trade commercial documents
An unconditional written payment order issued by a drawer to a drawee is legally defined as a Bill of Exchange.
It functions as both an instrument of debt settlement and a credit tool in foreign commerce.

Key Concept

Commercial Documents in Foreign Trade - Bill of Exchange
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Commercial Documents in Foreign Trade

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