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a means of payment. In an export contract, the exporter may require the foreign importer to open a letter of credit at his local bank (the issuing bank) for the amount of the goods. This will state that it is to be negotiable at a bank (the negotiating bank) in the exporter’s country in favour of the exporter; often, the exporter (who is called the beneficiary of the credit) will give the name of the negotiating bank. On presentation of the shipping documents (which are listed in the letter of credit) the beneficiary will receive payment from the negotiating bank.
On foreign trips nowadays people use widely traveller’s cheques which can be acquired practically at any branch of a bank. For tourists they have at least two main advantages: they are much cheaper than credit cards, and are a safe and reliable way of keeping money. The most popular traveller’s cheques are those issued by Thomas Cook, VISA and American Express.
Task 1. Learn the following words and word-combinations:
medium of exchange – засіб обміну;
store of value – міра вартості;
unit of account – одиниця розрахунку;
yardstick – мірило, критерій;
standard of deferred payment – засіб відкладеного платежу;
portability – nopтативність;
durability – довговічність;
divisibility – подільність;
monies – грошові суми;
to ascertain – визначати;
transferability – здатність обміну;
recognizability – пізнаваність;
counterfeit – фальшиві гроші;
to recapitulate – називати;
legal tender – легітимний засіб платежу;
to back – підтверджувати;
fіat moneyAm. – паперові гроші (не забезпечені золотом).
Task 2. Answer the questions on the text:
1. What are the functions of money?
2. What are the properties of money?
3. What kinds of money are coins and notes?
4. What institutions are responsible for issuing money?
5. What is legal tender?
6. What is the peculiarity of convertible money?
7. What does fiat money mean?
8. What are payment terms?
9. What is the difference between cash on delivery and cash against documents?
10. What is a letter of credit?
11. Why do tourists prefer to use travellers cheques instead of cash?
Task 3. Substitute the following definitions with the words below:
deposit, puchasing power, deferred, outstanding, depreciation, counterfeit, legal tender, yardstick, to withdraw cash.
- … – money placed in a bank account.
- … – deduction in the value of a currency against other currencies.
- … – money in notes and coins.
- … – amount of goods that can be bought for a contain sum of money.
- … – to take from the account.
- … – issued for circulation.
- … – form of money which must, by law, be accepted in payment of a debt.
- … – put off to a later time.
- … – standard of comparison.
- … – made in imitation of another thing in order to deceive.
Text 2.
LETTER of OFFER
After considering the enquiry for some time the prospective seller sends an offer in reply.
The offer usually quotes the price and stipulates terms of delivery, terms of payment and discounts, packing, transportation costs, time of delivery and some other necessary details.
When sellers quote prices in their offers they usually state on what terms at this price, they will deliver the goods. The supplier trying to attract the attention of potential clients or looking for new clients for special products or their range will speak about a firm offer which stipulates some specific conditions, such as a deadline and a system of discounts. The price will certainly depend on the terms of delivery.
The most popular terms of delivery in foreign business transactions are: Ex-mill, ex-works (from a plant or factory) ; fob (free on board) ; for (free on rail) ; cif (cost, insurance and freight) ; cip (cost, insurance and payed to…) ; c & f (cost and freight).
If the goods are offered on ex-mill terms the price will include the cost of the goods only.
If the goods are offered on fob terms the price will include the cost of the goods and transportation expenses to the port of shipment only.
If the goods are offered on for terms the price will include the cost of the goods and transportation expenses to the railway station only. These terms are similar to fob terms. The only difference is the mode of transportation. In case fob terms the goods are shipped on board ships or planes. In case of for terms the goods are transported by railway.
If the goods are offered on cif terms the price will cover the cost of the goods, insurance expenses and freight or transportation expenses, to the port of