The sharp rise of internet commerce spawned the emergence of large-scale retailers who sell online to an international marketplace. Now, more than ever, the world is smaller. There are more cross-culture relationships and the advancement of products into new markets never seen before. All of this can be accomplished without leaving your house. You can also be shopping at one store and find the same product online at a better price and order it from your mobile phone.
To accomplish supplying products to new markets from foreign countries, companies utilize shipping companies. Those shipping companies operate on maritime routes between various jurisdictions and are subject to the maritime laws of those jurisdictions or to applicable international law when traversing international waters.
Often, it is an individual who will be purchasing goods imported from an international route to be sold online. People who have online businesses often purchase goods from factories in the Far East in places like China and Vietnam and then rebrand that merchandise and sell it online in the United States and Canada. When it is an individual with a small business, the individual will probably be unable to attain a letter of credit from his or her bank to secure the transaction; instead, the individual may be required to issue a Bill of Exchange.
Bill of Exchange
A Bill of Exchange is a written document wherein one party, referred to as the drawer, obligates him or herself to pay the other party, referred to as the drawee, a specific sum in an international trade transaction. The document will be either a sight bill, which allows the drawee to draw the sum immediately, or a term bill, which allows the drawee to draw the sum on a fixed date. The Bill of Exchange will specifically identify the drawer and drawee and contain a date when the drawee may withdraw the funds.
A Bill of Exchange is similar to a check in that the drawee can use it upon endorsement of the drawer. The drawee can transfer the Bill of Exchange if it is endorsed the same way he or she can with a check. Usually, the drawee will deposit the check in his or her bank account and the bank will draw upon the check from the drawer’s account.
A Bill of Exchange must be “unconditional” to be enforceable. That is to say, it must allow the drawee to deposit the check upon the date agreed without any conditions attached.
Bank Draft
A Bank Draft is a similar instrument to the Bill of Exchange and is also commonly used in international trade. A Bank Draft is when the buyer goes to the bank and requests a bank draft. The bank determines if there is sufficient coverage for the amount requested and segregates that amount by placing a hold on the money. The bank issues a bank draft, which is a check, to the buyer. The buyer gives that draft to the seller who cashes it. It is considered safer than a Bill of Exchange and is often used when making a large purchase, which is common in maritime transactions.
Are you involved in maritime trade? Contact the Kolodny firm, experienced maritime attorneys.
Alan Kolodny is committed to representing injured clients in Texas and throughout the United States. Alan earned his B.A. from Rice University and his J.D. from Southern Methodist University.
He focuses his practice on representing plaintiffs in personal injury cases involving the following matters: maritime and offshore accidents, including those under the Jones Act; automobile and 18-wheeler truck accidents; and industrial site accidents, work-related accidents, and claims for injured railroad workers under the Federal Employers’ Liability Act.
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