Bill of Exchange: Characteristics and Requirements
CHAPTER XX – Bill of Exchange
General
Notion and general characteristics.
A bill of exchange can be defined as a negotiable instrument that incorporates an unconditional order, given by the issuer to another person, to pay a certain sum to another party. It is regulated by Law 19/1985 of July 16, concerning exchange and checks.
There are three subjects:
- The drawer, who issues the document giving the payment order, ensuring compliance.
- The drawee: the person to whom the payment order is directed. They
Understanding Checks: Types, Endorsements, and Payments
People Involved in the Payment of a Check
People involved in the payment of a check:
Classes of Checks
- Bearer: Can be paid to the person who presents it for collection.
- Nominee: Intended for a specific person or entity.
- Nominative in-command: Names a person or entity so that it can be transmitted by endorsement.
The Endorsement
The endorsement is a provision that serves to pass the check. The person who transmits the check is the endorser, and who receives it is the endorsee.
A check payable to the order
Read MoreCustoms Procedures and Incoterms in International Trade
Customs Procedures in International Trade
Customs play a crucial role in exercising control over international commercial exchanges. It is a government office responsible for collecting customs duties and taxes, and enforcing rules and regulations regarding what can enter a country. They also fight against smuggling activity.
European Union (EU): No customs duties are applied to goods traveling within the EU territory (Customs Union). A common external tariff is applied on goods entering the EU. The
Read MoreExport Readiness: Company, Product, and Documentation
Company and Product Readiness
Company Readiness
- Established domestically
- Have sales grown for 3 years?
- Covers all domestic market
- Price-competitive in the domestic market
- Has conducted market research
- Payment terms you can offer
- If there is foreign demand
- Transport costs manageable?
- Has knowledge to export
- Adaptation in new market
Documentation
Internal Documentation
External Documentation
- Proforma Invoice (contractual offer)
- Transport document
- Purchase order (client order nº)
- Consular invoice (additional proof)
Understanding Sales Contracts: Key Elements & Obligations
The contract of sale involves one party, the seller, undertaking to deliver a specific item to another party, the purchaser, who agrees to pay a price in money or its equivalent (CC Article 1445).
Key Characteristics of Sales Contracts
- Bilateral: Obligations arise for both parties, encompassing both buying and selling.
- Consensual: Completion of the contract requires agreement on the item and the price.
- Required: Duplication of obligations; the seller conveys the item, and the buyer pays the agreed price.
Understanding Commercial Documents in Accounting
Commercial Documents
Accounting transactions reflect changes experienced by the assets of a business. These variations cannot be arbitrary, but must be based on documents supporting each transaction. These are called commercial documents.
Companies receive documentation from those persons or entities with which they do business. These vouchers are called external documents.
When the company issues such documentation, these are referred to as internal documents.
The main documents that relate to accounting
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