ABSTRACT
Introduction In international sales, because of the long periods during which the cargo is in transit and the location of the seller and the buyer is in different countries, problems arise when it comes to payment since a simultaneous exchange of goods for money is not possible. The seller (exporter) cannot deliver goods to the buyer (importer) with one hand and take money from the buyer with the other. Ideally, the exporter would prefer to be paid for the goods as soon as they are put on board the ship. Financially, it is best if capital tied in the goods is released at the earliest opportunity, so that uncertainty about whether payment will be received on arrival at the destination is removed. Insolvency of the importer by the time goods reach their destination, or inability to raise suffi cient funds to pay for them, does not concern the exporter. Of course, the seller could sell the goods at the port of destination, if he still retains property in the goods but then takes on the risk of unfamiliar conditions of a foreign market. Equally troubled about tying capital to cargo in transit, the buyer would wish to delay payment until arrival. Payment on arrival would also enable him to ascertain that he has not received sub-standard goods.
