Acceptance

Acceptance in foreign trade specifically refers to the act by which the drawee of a time draft (usually the buyer or its bank) signs on the draft and promises to unconditionally pay the face amount on the maturity date of the draft. Its main application scenarios are in collection (D/P, D/A) and letter of credit (time L/C) transactions. Points to note: 1) Once acceptance is made, the drawee assumes legal liability for payment at maturity; 2) After acceptance, the draft becomes a negotiable instrument and can be discounted or transferred; 3) It is necessary to distinguish "acceptance" from "payment" - acceptance is a promise to pay in the future, while payment is immediate settlement; 4) In D/A collection, the buyer can obtain the documents after acceptance, and the risk is borne by the seller; 5) The credit rating of a banker's acceptance is higher than that of a commercial acceptance. Unlike "negotiation," negotiation is a bank's purchase of a draft, whereas acceptance is merely the drawee's promise. Foreign trade practitioners should pay attention to the acceptor's creditworthiness, the acceptance period, and whether it is revocable.