Korea International Trade Specialist Grade 1 key terms

A bank's written undertaking to pay a beneficiary against presentation of documents that strictly comply with stated terms. It substitutes bank credit for buyer credit, so the issuing bank pays regardless of disputes over the underlying goods contract.

A credit under which payment is made only against delivery of specified transport and commercial documents, typically a bill of lading, invoice and packing list. The documents, not the goods, are the subject of the bank's examination.

The rule that documents tendered under a credit must conform exactly to its terms; trivial discrepancies can justify refusal. Banks deal in documents, so compliance is judged on the face of the papers rather than on the actual shipment.

Any difference between presented documents and the credit's requirements, such as late shipment, wrong port name or missing endorsement. The bank may refuse, request waiver from the applicant, or pay under reserve pending acceptance.

A bank that purchases the exporter's draft or documents under a credit before maturity, advancing funds against them. It may do so with or without recourse, depending on whether it has confirmed the credit or merely acts as nominated bank.

A method of payment in which the seller's bank forwards documents to the buyer's bank and releases them against payment or acceptance, without any bank payment undertaking. Risk of non-payment therefore remains with the exporter.

Two collection arrangements: under D/P the buyer receives documents only after paying, while under D/A the buyer accepts a time draft and receives documents before maturity. D/A exposes the seller to greater credit risk.

An unconditional written order by one party to another to pay a fixed sum at a stated time to a named person or bearer. In trade it is drawn by the exporter on the importer or a bank and may be discounted or accepted.

The set of papers evidencing shipment and title, typically comprising the bill of lading, commercial invoice, packing list, insurance certificate and certificate of origin. Banks and customs both examine them, so consistency across documents matters.

A document issued by a carrier acknowledging receipt of goods for shipment and serving as evidence of the carriage contract and, when consigned to order, as a document of title. Its cleanliness and endorsement affect payment.

The seller's itemized statement of goods, quantity, unit price, terms of delivery and total amount due. Customs uses it to value goods for duty, and banks use it to check that the credit's description of goods is matched.

A document certifying the country in which goods were wholly obtained or sufficiently processed. It supports preferential tariff claims under trade agreements and is required for quota or origin-marking purposes.

FCL means one shipper's cargo fills a container; LCL means several shippers' cargo is consolidated into one container. The distinction affects freight rates, handling risk and the timing of container stuffing and devanning.

Carriage of goods under one contract using at least two different modes, such as sea plus rail, managed by a single multimodal transport operator. One document and one liability regime cover the whole journey.

ICC-published standard trade terms allocating costs, risks and delivery obligations between seller and buyer. The current version is Incoterms 2020, with eleven rules ranging from EXW to DDP; they do not govern payment or title.

An Incoterms rule under which the seller delivers goods on board the vessel nominated by the buyer at the named port, bearing costs and risk until that point. The buyer arranges and pays main carriage and insurance.

An Incoterms rule for sea and inland waterway carriage where the seller pays freight and insurance to the destination port but risk passes on board at origin. Insurance cover is minimum-level unless the contract requires more.

The Incoterms rule imposing maximum obligation on the seller, who delivers goods cleared for import at the named destination and pays duties and import formalities. Buyers unable to import directly should avoid it.

An Incoterms rule where the seller delivers goods cleared for export to the carrier nominated by the buyer at a named place. It suits containerized cargo better than FOB because delivery can occur before loading on a vessel.

The moment defined by the chosen trade term at which loss or damage risk shifts from seller to buyer, which may differ from where costs pass. Misreading this split is a common source of contract disputes.

A treaty governing contracts for the international sale of goods, covering formation, obligations, remedies and risk. It applies automatically between contracting states unless the parties exclude it, and it does not govern validity or title.

Remedies available when a party fails to perform, including avoidance, specific performance, price reduction and damages measured by foreseeable loss. Under the CISG, mitigation and foreseeability limit the amount recoverable.

A contract clause excusing performance when an unforeseeable, unavoidable event beyond a party's control prevents it. Courts read such clauses narrowly, so drafting the triggering events and notice procedure precisely is essential.

The ICC's Uniform Customs and Practice for Documentary Credits, incorporated by reference into most credits. It sets rules on document examination, the five-banking-day refusal period and the treatment of non-documentary conditions.

Korean legislation regulating cross-border payments, capital transactions and foreign currency dealings. It imposes reporting or authorization duties on specified transactions and underpins Bank of Korea and foreign exchange bank oversight.

The price of one currency expressed in another, quoted in Korea as won per unit of foreign currency. Movements affect exporter margins, so contracts often specify the rate basis or a hedging arrangement.

A contract to buy or sell foreign currency at a fixed rate for settlement on a future date. Exporters use it to lock in won proceeds and remove uncertainty between shipment and receipt of payment.

Any technique reducing exposure to currency movements, including forwards, options, currency swaps and natural hedging through matching receipts and payments. Korean exporters must also consider reporting duties for derivative positions.

The net balance of a bank's foreign currency assets and liabilities, whose size regulators cap to limit currency risk. Exceeding the limit requires reducing exposure or raising capital against it.

Credit facilities supporting import and export, such as pre-shipment loans, export bill discounts and import usance financing. Lenders rely on the underlying trade documents and payment undertaking as security.

Cover purchased to protect exporters and lenders against non-payment from commercial or political causes. In Korea it is provided by the state-backed export credit agency, enabling riskier markets and longer payment terms.

Business letters and emails exchanged in international trade, following conventions such as clear subject lines, reference to prior correspondence, and a courteous close. Clarity and completeness matter more than ornate phrasing.

The paired acts that form a contract: a definite proposal and an unqualified assent to it. Trade correspondence must distinguish a firm offer from an invitation to treat and from a counter-offer that alters terms.

A written complaint seeking remedy for defective goods, short shipment or late delivery. Effective letters state the facts, cite the contract basis, quantify the loss and propose a specific settlement.

Systematic gathering of data on demand, competitors, pricing and regulation in a target country. Exporters use it to select markets and to justify entry mode, product adaptation and pricing decisions.

Dividing a foreign market into groups of buyers with similar needs or behavior so that marketing effort can be targeted. Criteria include geography, industry, purchase volume and price sensitivity.

Designing an offer and image so that target buyers perceive it as distinct from competitors. In export marketing it must be adapted to local culture, distribution channels and price expectations.

The arrangement chosen for selling abroad, ranging from indirect export through agents, distributors, licensing and joint ventures to wholly owned subsidiaries. Choice trades control and margin against risk and capital.

A duty rate lower than the general rate, granted to goods meeting a trade agreement's origin rules. Claiming it requires a valid origin document and compliance with direct consignment and certification procedures.

Criteria such as tariff shift, value-added percentage or specific process that determine whether goods qualify for preferential treatment under a free trade agreement. Failure to satisfy them means the standard rate applies.