Law of International Payments

Aims of the course

Providing goods/services on credit or deferred payment terms is - inter alia - vital to win business, but may expose companies and financial institution to wide range of political and commercial credit risks of their defaulting or bankrupt buyers/debtors.
Therefore, the main objective of the course is to acquaint the students with the theory and practice of international business, trade finance and inherent risks as well as with financial and legal instruments created and developed by commercial and banking praxis and various security devices for protection against the risks in business transactions.
With solid knowledge and understanding of commercial and non-commercial risks of non-payment in credit transactions and awareness of importance and different methods of credit risk management for undisturbed and profitable contemporary business, the students will acquire multidisciplinary (business, financial and legal) basic theoretical and practical expertise in credit risk management as well as to employ various financial and legal instruments for protection - with their main features and applicable legal rules presented – which are frequently used in corporate sector as well as in banks and other financial institutions.

Course syllabus

1. Introduction and course overview through fundamental trade dilemma: international trade - trade finance and assumption of inherent risks by buyers and/or vendors.

2. Commercial and non-commercial risks inherent to business transactions on (credit) deferred payment terms and advanced credit risk management on transaction and risk portfolio basis (integral risk management).

3. Monetary obligations, currency risks and economic/business, financial and legal means of protection:
a) transaction,translation and economic exposure;
b) matching, leading/lagging self-insurance and assignment of trade receivables;
c) insurance and foreign exchange and credit derivatives;
d) gold, commodity (index/sliding scale) and currency (protective value) clauses (foreign money’s obligations, fixed exchange rate/unit of account/combination of currencies/multiple currencies/option of place/composite currencies clauses).

4. Non-payment risks, main methods of payments and bank documentary instruments in international business transactions:
- clean payment and risks associated to sales on credit (deferred payment) terms with deliveries on open account;
- checques, promissory notes and bills of exchange in international trade;
- documentary collections (CAD, D/A and D/ICPO);
- L/C;
- bank guarantees and surety bonds in international business transactions.

5. Law of International Payments and Sources of Law:
- national legislations, usages, international conventions and case law;
- ICC rules.

6. Trade finance:
- loan agreements and other credits;
- supplier and buyer credits;
- project financing and Public-Private Partnership (PPP);
- invoice discounting, factoring and forfaiting.

7. Credit insurance
a) underwriting and legal specifics of credit insurance class and its functions (claims payment, enhanced external financing and sales promotion, preventive and curative functions - credit information with buyers'/debtors’ (revolving) credit limits, debt collection and recoveries;
b) main characteristics of insurance cover for short-term trade credits on open account in exports and domestic trade (whole turnover, spread and specific account insurance coverage for post-shipment commercial and/or non-commercial credit risk and pre-shipment manufacturing risks – avoidance of the insured's adverse selection of risks and moral hazard) on the basis of framework insurance contract;
c) basic principles and credit insurance conditions: cover for insolvency and protracted default within set credit limits, duties of the insured party (conditionality of credit insurance), insurance premiums and claims payment;
d) procedures and credit insurance policy management.


8. ECAs' medium-term export credit and investment insurance schemes, international rules (WTO, OECD, EU and Berne Union), role and importance of SID Bank.

Course director(s)

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  • Office Hours
  • Tuesday at 12:00 in RZ-201
 
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