Cover & spine - Trade Finance

SNR DENTONthrough. If any of this is achieved, there could be simpler documentation aroundthe corner.January 2011 sees the new INCOTERMS 2010 rules coming into effect. Againan improvement on the previous version. The INCOTERMS rules deal with theexport and delivery of goods. They do not deal with transfers of property rights ingoods. Some of the delivery terms have changed. For the sentimental, there willno longer be a transfer of risk over the “ship’s rail”, but a more carefully defineddelivery point.Does this adversely affect trade financiers? It should not so long as contracts arechecked to make sure they have the major terms setting out when obligations areto be performed and by whom.Sale contracts must still have all these provisions. Incorporating theINCOTERMS rules is not an excuse for avoiding this.Forfaiting2011 is likely to see the new rules for forfaiting. They are to be called the UniformRules for Forfaiting (URF). This will bring to an end a process started in 2004with the launch of the IFA Guidelines for secondary market trading. This wasfollowed by the setting-up in 2009 of a joint drafting committee by the ICC(International Chamber of Commerce) and IFA (International ForfaitingAssociation) for the creation of rules for the Primary and Secondary forfaitingmarkets.Forfaiting is the creation of a transaction where deferred payment claims incurredby a buyer usually from the sale of goods can be sold by the seller of the goods at adiscount to a forfaiter. The buyer gets credit terms and the seller gets his cash. Theforfaiter is prepared if the circumstances are right to take a transfer of the paymentclaims from the seller without recourse to it. The forfaiter can then either keep thepayment claims or sell them on to another party.The creation of the transaction is the Primary market. The subsequent sales are theSecondary market. URF will create rules for both. The rules can be incorporatedin the agreements between the parties and interpreted in accordance with the lawof the contract. Once adopted and used this will provide more clarity in themarketplace. It may also allow more parties to join in this market.URF is being called the UCP for forfaiting, comparing it to how letters of creditare issued under UCP 600.TRADE FINANCE The Guide to Global Trade Finance Markets 2011 9