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Difficulty: MediumCommercial Documents in Foreign Trade

An importer dispatches an order to an overseas purchasing agent containing rigid instructions regarding the precise manufacturer, price range, and shipping terms, leaving the agent with no discretion. Which of the following commercial documents has the importer issued?

  1. Closed indentAnswer
  2. B
    Debit note
  3. C
    Letter of hypothecation
  4. D
    Credit note

Answer

The closed indent is the commercial document sent to an overseas buying agent containing precise instructions regarding the manufacturer, price, and terms of purchase.
A closed indent is a purchase order sent by an importer to an overseas buying agent that specifies exact details such as the manufacturer, quantity, price, and packing instructions, leaving the agent with no discretionary power.

Step-by-Step Solution

1
Identify the type of transaction and commercial document described in the scenario.
The document is an order placed by an importer with an overseas agent detailing mandatory purchase conditions.
An order sent through an agent in international commerce is classified as an indent.
2
Distinguish between an open indent and a closed indent.
Because the agent is restricted to specific suppliers and conditions with zero discretion, the document is a closed indent.
An open indent allows the buying agent freedom of selection, whereas a closed indent strictly binds the agent to exact specified details.

Key Concept

Types and functions of indents in foreign trade
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Topics

Commercial Documents in Foreign Trade

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