DAFI III

Conf. Univ. Dr. Violeta Negrea

I. CROSS CULTURAL NEGOTIATIONS

Objectives:

­ students will become familiar with specialized vocabulary, preparation of a negotiation and specific attitudes ­ reading comprehension ­ role playing

I. Answer the following questions before reading the text: 1.What is to negotiate? 2. What sort of character features should a negotiator have? 3. Are these features a natural endowment only or they can be educated?

II. Answer the following questions after having read the text: 1. When do we have to negotiate? 2. What is a conflict? 3. How do you think that a conflict can stimulate creativity and motivation? 4. Developing negotiation skills is not changing character features?

"Every desire that demands satisfaction and every need to be met ­ is at least potentially an occasion for negotiation; whenever people exchange ideas with the intention of changing relationship, whenever they confer for agreement, they are negotiating".

(Lax. D. A. and J. K. Sebenius, The Manager as a Negotiator)

We are involved all the time in situations that need to be dealt with negotiation: at work, at home, when recreating. A conflict is one in which there are opposite interests, and both sides prefer to search for solutions, rather than giving in or breaking­off contact. Few of us enjoy dealing with conflicts­ with either bosses, peers, subordinates, friends, or strangers. This is particularly when the conflict becomes hostile and when strong feelings become involved. Resolving conflict can be mentally exhausting and emotionally draining.

It is important to understand that a conflict that requires solutions has its positive and negative outcomes. It is not always destructive, but can play a productive role not only for one party but also for the relationship itself. Important is to know how to manage a conflict not to escalate it out of control. Conflicts should be used as a critical aspect of creativity and motivation. Studies have shown that negotiation skills are significant determinants of a career success. While negotiation is an art form to some extent, anyone can learn some specific techniques. Learning these techniques and developing skills will be a critical component of a successful career.

III. Match the following words with the gaps in the text: 1. alternative; 2. responses; 3. process; 4. negotiators; 5. shift; 6. relationship; 7. option.

Responding to conflict

Various a) ______________ in terms of conflict can be categorized according to the importance of satisfying our needs or the other person's needs. If we are cut­ off driving to work, we may decide "avoidance" as the best b) _____________. But sometimes "avoidance" may be a poor c) ___________. Most successful d) _____________ start off assuming collaborative (integrative) or win­win negotiation. This is because most negotiations involve situations where we want or need an on­going e) ___________ with the other person. The key to successful negotiation is to f) _______________ the situation to a win­win event if it looks like a win­lose situation. All negotiations involve two levels: a rational decision making g) _____________ and a psychological one.

IV. Read the following text and draw out the main ideas:

Before the event, it is helpful to plan your negotiation. State whether you are in a win­win position or win­lose one. Make sure of your goals, positions, and interests. Figure out the best resolution you can expect, what is a fair and reasonable deal, and what is a minimally acceptable deal. What information do you have and what more do you need. What are your competitive advantages and disadvantages? What are the other's advantages and disadvantages? Give some thought to your strategy. Be clear about your real goals and real issues and try to figure out the other person's real goals and issues. Negotiations fail because people are so worried about being taken advantage of that they forget their needs. People who lose track of their goals will break off negotiations even if they have achieved their needs because they become more concerned with whether the other side "won". Equally important is to be clear and communicate why your goals, issues, and objectives are important to you. The other side needs to know why issues are important to you, not just that they are important.

It is important to be clear about your walkway (also called reservation position), and your competitive advantage ­ your strongest points. You need to know the advantages to the argument. Similarly, know your weakness and the other's weaknesses. In most conflicts resolution or negotiation situations you will have a continuing relationship with the other person so it is important to leave the situation with both sides feeling they have "won". It is very important that the other person does not feel that he or she "lost". When the other person loses, the results are often lack of commitment to the agreement or even worse, retaliation. The most common failure is the failure of negotiation parties to recognize the integrative potential in a negotiating problem; beneath hardened positions are often common or shared interests.

V. Identify the following types of negotiators: 1. the aggressive; 2. the long pauser; 3. the mocking negotiator; 4. the interrogator; 5. the cloak of reasonableness; 6. divide and conquer; 7. the "act dumb" negotiator.

a) mock and sneer your opposition's proposals to get the other side so upset that they will say something they may regret later;

b) the type who unsettles the other side by making cutting remarks about their previous performance, unreasonableness, or anything that can imply the opponent is worth little;

c) produce dissension among opposition so they have to pay more attention to

their own internal disagreements rather than the disagreements with the opposition; ally with one member of the team and try to play him or her off against the other members of the team;

d) appear to be reasonable while making impossible demands for the purpose of winning the friendship and confidence of the others;

e) listen to the other side but don't answer immediately; appear to give it considerable thought with long silences, hoping the silence will get the other side to reveal information you need;

f) meet all proposals with searching questions that will imply the opponents haven't done their homework; challenge any answers in a confronting manner and ask the opposition to explain further what they mean;

g) pretend to be particularly tense and by doing so exasperate the opposition in hopes that at least one member of the opposing team will reveal information as he tries to find increasingly simple ways to describe proposals with each proposal being elaborated and amplified so any one can understand it.

VI. Read the text and answer the questions: 1. What is a "recognizable behavior" of the people of a country? 2. How do cultural variables manifest on a national level? 3. What influence has the level of personal education and attitude towards cultural communication in business negotiations? 4. What is the role of verbal and non­verbal communication in intercultural behavior for business?

Each country has a culture that results in a generally recognizable behavior. As part of that culture, we are comfortable, but often are unable to explain why we act or communicate as we do. Some of our actions are based on traditions, emotions or simply acceptance that., others are based on what we are taught. Consequently, it takes time to adapt ourselves to another culture, a person going to certain stages such as anticipation, disillusionment, adaptation and final acceptance.

Each country has variables on a national level. We learn something about a country's culture through knowing the educational levels of the population, the legal and the regulatory restraints affecting business, the economic philosophies or national and foreign trade practices, the political attitudes, religion, as practiced by the state or the individuals, the social norms of the state, and the language, as it affects international communication. Additionally, each person within a country has behavior that is more personal. How they handle time, what a comfortable distance for interpersonal communication is, what foods are wholly acceptable, what is considered appropriate clothing, what the unwritten personal manners within a home or office are, what procedures and speed are followed in arriving at personal and business decisions. Finally, cultures have both verbal and non verbal communication characteristics; what is acceptable in one culture may be entirely unacceptable in another.

Your effectiveness in communicating well and succeeding overseas requires adapting to many factors. Knowing even the polite forms of a foreign language is helpful, as is knowing some differences in writing and speaking. Do some research into various organizations and journals interested in international business areas. Then you are on the way to successful intercultural communication.

VII. Write the answers to the following questions: about your country and another country of your choice: (Joan Wilson ­ Foreign Office Institute U.S. Department of State)

Romania Other country

1. Who are the country's national heroes and heroines? 2. What is the attitude towards gambling, drinking, drugs, religion, education? 3. What things are taboos in this society? 4. Which colors are positive in tone? Which ones are negative? 5. What are the special privileges of age and/or sex? 6. What are the important holidays? How is each of them observed? 7. What sports are popular? 8. What is the normal work schedule? How does it accommodate to environmental or other conditions? 9. How will your financial position and living conditions compare with those of the majority of people living in this country? 10. What is the history of the relationship between your country and the host country? 11. Where are the important universities of the country? If university education is sought abroad, to what countries and universities do students go?

VIII. Appoint several teams within the class. Each team has the responsibility of selecting a single country and then orally reporting to the class some of that country's national environmental variables that may affect business and communication. A possible outline might include the following points:

The country The people of the country

Land and climate Population

History and government Language

Economy Religion

Education Holidays

Transportation Attitudes

Health

IX. Work in groups of four or five. Each member group will represent a department of an imaginary company concerned for a new investment project in a foreign country you chose previously. The president will call for a meeting of these departments to have oral presentations about the new project. Draft a minute of the meeting.

X. a) What would you do about the bill for dinner? Discuss in groups.

b) Imagine a similar situation and find its solution.

A young American invited to dinner four couples ­ two American, and two Japanese ­ who had previously had him for dinner at their homes. Because he was a poor cook, he decided to entertain them at a restaurant instead of at his house. He made it clear that the invitation was to compensate for his inadequate cooking skills, but he did not explicitly mention his intention to pay for the restaurant meal, which he felt was implied by the invitation itself.

When the waiter presented him the bill, all the friends asked the amount of their share. After a few rounds of insistence by both sides, the American friends conceded and thanked the young man for the meal.

The Japanese friends, however, did not stop. They tried to press money upon their host, acted as if they did not understand, and protested that their wives would disapprove of them if they did not succeeded in paying. The young man felt he could not accept their money, because it would embarrass the American friends who had let him pay. The Japanese friends were insistent, and began to talk together in Japanese, a rarity in front of non­speakers. The young man was very distressed, because the objective of the dinner was to thank his friends, not to upset them.

What would you have done to extricate all parties from this discomforting situation?

XI. Translate into English:

a. Negociatorii englezi reprezinta o categorie aparte, fiind recunoscuti drept cei mai abili, dar nu in sensul de a jongla in arta viclesugului. Pregatiti in institutii specifice, care imbina diplomatia, psihanaliza, cu arta dialogului si a business­ului, britanicii au o clasa inalta. Negociaza numai pe baza unor date concrete, semneaza dupa o matura chibzuinta si pe baza unor analize complete ale ofertei si se tin de cuvant asupra celor convenite. Vin pregatiti cu fise de caracterizare ale partenerilor si detin informatii la zi despre potentialul partenerilor si produsele sau serviciile care urmeaza a fi negociate. Au scheme de negociere pregatite in prealabil, astfel incat inspiratia de moment joaca un rol minor. Echipa de negociatori nu este schimbata pe parcursul tratativelor, iar intre membrii acesteia exista o adevarata comunicare spirituala.

b. Negociatorii germani sunt condusi de deviza "un om, un cuvant", dand dovada de corectitudine in absolut orice imprejurare. Sunt seriosi, calmi, siguri de ei, buni profesionisti, punctuali, exacti in tot ceea ce intreprind sau vorbesc. Au o educatie aleasa, sunt protocolari, politicosi si meticulosi chiar daca uneori, prin superioritatea lor, dau impresia de exces de patriotism specific. Se straduiesc sa obtina cele mai bune conditii, dar lasa si partenerului "portite" de castig. Cei mai perseverenti dintre ei chiar se transpun in mentalitatea partenerului, daca acest lucru este necesar pentru atingerea scopului propus.

c. Spaniolii si portughezii seamana mult cu romanii prin sorgintea latina comuna. Sunt calzi, prietenosi, ospitalieri, si apreciaza partenerii care se intereseaza de cultura, istoria, si modul lor de viata. De fapt, similitudinea cu italienii este recunoscuta. Ritmul derularii tranzactiilor este destul de lent, iar amanarea este deseori un subterfugiu agreat pentru mentinerea temporara a stadiului discutiilor pe stand­by. Prefera negocierile directe, dar ocazionate de intalniri protocolare, neoficiale si "in spatele cortinei". Inainte de negocierile propriu­zise, la care intarzie adesea, in ciuda pretentiilor disimulate ca partenerii sa fie punctuali ­ aloca o parte din timp cunoasterii interlocutorilor, avand o putere de introspectie deosebita. Formal in primele runde de tratative, treptat, recurg la elemente de ordin emotional. Mai mult, cand nici nu te astepti, manifesta o politete exagerata, vecina cu lingusirea, ceea ce creeaza o stare euforica si "iti fura" din timp.

d. Negocierile cu parteneri rusi sunt de regula dificile, obositoare, dureaza mai mult decat cu organizatii sau companii similare din Europa Occidentala sau SUA. Impresia vechilor negocieri "tovarasesti" persista, desi ambele tabere cauta sa nu o arate. Costul negocierilor este mai ridicat din cauza perioadei lungi de semnare a contractelor. De obicei, deoarece autoritatile sunt mai birocratice si lipsite de flexibilitate, prefera parteneri cunoscuti. Negociatorii est­europeni sunt extrem de precauti, deoarece sunt in joc de obicei banii firmelor de stat si orice eroare poate duce la pierderea serviciului pe care il au. Relatiile personale bune joaca un rol major in eficientizarea temporala si de substanta a afacerii. Din cauza saraciei in devize convertibile, se incearca plata cu produse, fie partial, fie total si compania care accepta barterul isi sporeste sansele de reusita.

e. Negociatorii chinezi nu suporta partenerii tineri. Ei nu accepta sa intre in negociere daca, din start, pretul solicitat nu este redus pana la nivelul considerat de ei ca rezonabil sau daca nu li se argumenteaza convingator justetea pretului solicitat. Sunt niste gazde excelente. Au inceput sa aprecieze complimentele, dar manifesta inca reticenta fata de partenerii tineri sau de sex feminin. Se prezinta cu echipa de negociere supradimensionata si adeseori, isi schimba echipa partial sau total. Au mania de a inocula, in derularea discutiilor, asertiuni legate de relatiile politice, asa ca tratativele sunt de multe ori anevoioase. Nu se grabesc niciodata. Echipele cu care se prezinta la masa discutiilor au in componenta lor multi specialisti care intreaba tot timpul cate ceva, sporind stresul partenerilor. In acest fel esti obligat sa raspunzi minute in sir la un tir de intrebari (legate mai mult sau mai putin de obiectivul negocierii), fiind permanent intr­un fel de defensiva care creeaza o senzatie de oboseala fizica si psihica.

f) 7 tehnici verificate pentru ratarea unei negocieri

1. Improvizati totul. In nici un caz nu va osteniti sa stabiliti dinainte ce negociati. Mai ales feriti­va sa delimitati cu precizie obiectul negocierii (o clauza, un pret, un termen, o garantie, etc) 2. Straduiti­va sa torpilati disponibilitatea celuilalt. De la inceput, reprimati­ va orice incercare de a obtine vreo umbra de intelegere, de respect, siguranta, control. Tratati­l conform prezumtiei de rea credinta. Nu luati in serios ideea de negociere, pentru ca acomodarea reciproca a intereselor este o utopie. Rezumati­ va, cel mult, la a va targui, adica la a schimba un lucru cu altul. 3. Cultivati adversitatea. Subliniati tot timpul diferentele si nu cedati ispitei de a admite ca ati putea avea si vreun scop comun. Incepeti fiecare fraza cu “eu…” si scoateti­l pe “noi, impreuna…” din vocabularul dvs. Ideal ar fi sa va certati. 4. Grabiti­va sa enuntati primul oferta. Mai mult, faceti­o in termen categorici, pentru a nu va lasa nici o portita de scapare. Astfel, veti fi tot timpul cu spatele la zid, veti avea motive sa fiti peste masura de nervos si, de ce nu, veti suspenda discutiile. 5. Tratati de pe pozitia celui care n­are de ales. De pilda, aruncati toate resursele umane in joc, incepand negocierea de la nivelul patronului, cu toata echipa de consilieri alaturi, pentru a va priva de posibilitatea de a va replia, la un moment dat, sub pretextul consultarii cu unul dintre experti. In general, avand mereu o alternativa, v­ati simti prea relaxat, prea bine, prea avantajat. 6. Formulati o oferta minimala. Are sens oare, sa cereti mai mult decat puteti obtine? Daca interlocutorul accepta? In plus, ati dispune de un spatiu prea mare de manevra, ceea ce ar putea sa va plictiseasca. 7. Fiti crispat, grav, crancen. Daca aveti simtul umorului, uitati de el. Ar putea sa va puna in pericol esecul.

II. BANKING CONVENTIONS

Objectives:

­ students will become familiarized with terminology and documents specific to the bank conventions ­ loans, overdraft, letter of credit ­ reading, writing and form filling skills

A. Credit Facility Convention

I. Answer the following questions: 1. What is the difference between overdraft and loan bank facility? 2. When do the customers use each of them?

II. Read the text and find its key words. Then answer the questions:

In order to execute a loan, banks need paid­in capital that is earned from financial activities, borrowed funds, and from customers' deposits. The source for lending is always the money deposited with the bank by the bank's customers, whether in a demand or time account. This will always limit considerations in the degree of risk that the commercial bank will take. It cannot jeopardize the safety of the depositors. The domestic and the international bank will always obtain certain basic information that usually is forthcoming in a meeting with the potential borrower. It will learn how much money is being sought, the purpose of the loan, how long it is needed for, and how it will be repaid.

Banks make loans for worthwhile purposes: financing trade, expanding businesses, house building, and so on. They need evaluate the three C's of credit: character, capacity, and capital. That is the integrity of the borrower, his capacity to repay the loan, and the soundness of his financial position.

Sometime the loan applicant's ability to repay the loan is pendant on the purpose of the loan itself. Loans can be self­liquidation, when the source of repayment is from the sale of imported merchandise, or capital­expansion, when the source of repayment is from increased sales.

The financial statement of the borrower represents the financial position of the borrower and it usually consists of a detailed balance sheet and a profit and loss account statement. An audited financial statement requested by the credit officer will cover a certain period of the customer's activity.

In international banking activity, the credit officer will consider the economic and political outlook of the foreign country before loaning money to a foreign borrower, its balance of payments being an important source of information. The bank's prior experience with the borrower and the nature of his business represents a subjective factor in the decision­taking process. When the loan is granted, the bank will also decide upon the interest rate to charge. That will depend on the cost of money to the bank. This includes the average interest rate the bank is paying to its depositors, the bank's operating costs, the return that the bank expects. The bank must also take into account possible losses and provide dividends to the bank's shareholders.

There are also other considerations to take into account when a bank decides to allow a loan. If it is about a term loan, that is a second rate borrowing, the risk is greater and it must be compensated through a higher interest rate against the prime­rate borrowings that are short­term loans. The appropriate credit instrument is to be decided upon for the repayment of the loan too. The promissory note is the most customary that can be payable "on

demand" of the bank. The banker's acceptance can be used for loans involving international trade. It is saleable to investors so that the bank merely commits itself to pay on maturity. The bank does not have to commit its own funds. Credit extension may involve advances, discounting of accounts receivable, overdrafts, or advances against collections. A loan can be secured by collateral assigned to the bank, such as securities or precious metals, or guaranteed. When an agreement is reached, the borrower signs the necessary documents and the amounts are disbursed to him.

For large loans, banks often form a syndicate each of them disbursing a portion of the loan. One bank puts the deal together and carries the administrative burden during the life of the loan, being the "lead bank". A syndicate is sometimes desirable because of the legal lending limits on banks, the general relationship of the total demand for credit compared to the supply of loanable funds, or the prudent banker's desire to spread the risk.

1. What are loans used for? 2. Explain the three C's of a credit. 3. What is the way to determine the interest on a loan? 4. What is the difference between an unsecured loan or a loan secured with collateral? Why does a guarantee not represent security? 5. What is a promissory note for a loan? 6. What are the resources for loanable funds? 7. Enumerate the reasons to evaluate the risks for a loan. 8. Is it overdraft considered a loan? 9. What is the difference between a self­liquidating loan and a capital expansion loan? 10. Why is a financial statement required for a bank to allow a credit? 11. What can be determined from the balance sheet when a loan is applied for? 12. Is it necessary to consider the risk of a foreign borrower?

III. 1. Suppose you are a bank credit officer. A customer from Slovenia requests a loan for his company. List ten questions to ask him in your loan interview. 2. After having approved his loan request, list five factors to consider in calculating the interest rate for the loan. 3. If the loan is for five years, what should you look for in Slovenia's balance of payments?

IV. Fill in the blanks using the following words: 1. installments; 2. security; 3. amount; 4. money; 5. paid; 6. statement; 7. agreement; 8. default.

When a person borrows a) ____________ or sells goods on credit, the lender wants a guarantee to cover the loan. If the borrower does not pay back the borrowed b) ___________, the lender may sell the goods which were given to him as a guarantee and may also use the guarantee amount in order to cover the loan. Such a contract is called a "loan c) __________". On the basis of this contract, the borrower obliges himself to pay back the loan at a certain date, or in several equal d) _____________ at periods established throughout a month or a year. If the borrower does not pay back at required date, makes any false e) _____________ to lender, dies, becomes insolvent or terminates his business by all reason, the payment of the loan is "accelerated" and the borrower or his successors must pay immediately the whole amount which remained unpaid. When a loan f) ____________ is drawn up, the identity of the parts, the total amount of the loan, the interest rate and the date the loan that must be paid back will be taken into consideration. The contract will stipulate the description of the goods which secures the loan, and the date on which the installment is to be g) __________ back. It will also mention the lender's obligation not to sell or destroy the good and the right of the lender in case of the borrower's h) ___________ on his obligations.

V. Identify the main parts the following Credit Facility Contract and translate them into Romanian: a) the preamble of the contract (name of the contractual parties, their address, fiscal code, represented by); b) the object of the contract; c) the body of the contract (clauses of the contract), d) signatures of the two parties.

CREDIT FACILITY CONTRACT

___________/____________ Made by and between: 1. (name of the bank) branch ____________ having its premises in ___________ hereinafter called ______ the “BANK” represented by (manager/deputy) _____________ and by Head of Department as “CREDITOR” ______________ and 2. __________________________________________ having its premises in _______________________registered at _______________under the number ____________, fiscal code ____________ , hereinafter called the “CLIENT”, represented by _____________ President/Administrator/ General Manager/Manager and by ____________ President/Administrator//Manager/ Financial Manager as BORROWER, 3. ______________ having the premises/domiciled in ________ registered at _________ under number _________ ,fiscal code ________, identified with ID/Passport series no issued by _____________ on __________ hereinafter called “CLIENT­CODEBTOR/GUARANTOR”, represented by ____________ (position/owner/usufruct beneficiary), as __________ (borrower/fidejusore guarantor), jointly and indivisible obliged toward the BANK the following CONTRACT has been signed.

ARTICLE 1 The Bank will grant the Client a loan or an overdraft facility hereinafter

called “FACILITY”, under the following conditions: Value:__________ Validity:_________ Object: the FACILITY will be exclusively used for: _________

1. Included in the Accounts plan of banking companies: one withdrawal several withdrawals (as scheduled bellow or in the annex) 1.1. Reimbursement of the facility will be made

one installment several installments (as scheduled below or in the annex)

ARTICLE 2. Pricing and payment conditions

In carrying out the present Contract, the Client/s owe(s) and will pay the Bank the following costs: 2.1. Base interest and margin

2.1.1. Base interest rate is _________ % p.a., periodically revised by the Bank for the entire period of the present Contract___________ , until full reimbursement of the debts toward the Bank.

2.1.2. Risk margin is ____% p.a. 2.2. Flat fees in the amount of ______ and will be paid by the Client when signing the contract. 2.3. Payment conditions

2.3.1. The Client is obliged to provide in the current account, in the currency withdrawals made, the amounts necessary to cover the debts (principal, interest and other costs, etc) maturing according to the provisions of the present Contract, and authorizes the Bank to debit the current account with these amounts.

2.3.2. The Bank is not liable for any debt caused by the non­existence of funds in the Client's current account since crediting the account is entirely the Client's obligation.

2.3.3. In case of default payment, the Client/Guarantor will pay the delay penalties calculated to the total amount of the debt with priority toward any other debt of the Client/Guarantor, other than those arisen from the present Contract.

2.3.4. In the case of default of payment, the Bank will sue and execute the Client/Guarantor in order to achieve full repayment of the debit.

ARTICLE 3. Securities

3.1. The Client, Co­debtors and Guarantors undertake jointly and solidarily to meet all the obligations arisen from the present Contract and for securing the facility, undertakes to provide to the Bank the following securities:

3.1.1. Mortgage on the building/usufruct on the building located in _____________________________________ property of ____________ as in conformity with _____________________. 3.1.2. Pledge on business asset owned by __________________ used by _____________________. 3.1.3. Personal guarantee of _______________ who understands to waive to the benefits of discussion and division and understands to constitute as bail: Deposit in the amount of __________ in the account no __________ opened with ___________ . Mortgage constituted Pledge on all his present and future assets Endorsement of commercial papers issued by ________ in favor of ___________. Claims arisen from ___________

­ contracts ­ shares ­ share of capital ­ drafts/promissory notes ­ invoices ­ others

3.2. In guarantee and payment, the Client issues a promissory note "in blank" as for a amount and maturity are concerned and authorizes the bank to fill it in at maturity or at any time, in case of a Client's and /or Guarantor's default, with the amount representing the entire debt (principal, interest, margin, increased margin and other banking fees) plus the expenses for preserving and execution for the goods, other costs and related delay penalties, as the case may be, as resulting from the present Contract and future Additional documents in force at the date of calling.

3.3. The Client/Guarantor concede the Bank's right to choose the way of sue and execute the collateral and the order of their execution in case of default payment or anytime in case of other Client's default by calling the facility before the term stipulated.

ARTICLE 4. INSURANCE

4.1. The Client/Guarantor undertake to insure against theft/fire/damage the

collateral constituted with an insurance company accepted by the Bank.

ARTICLE 5. OTHER OBLIGATIONS OF THE CLIENT/GUARANTOR TOWARDS THE BANK

5.1. The present Contract is a direct and unconditioned obligation of the Client/ Guarantor and will be considered at least equal with to the commitments undertaken so far and with preferential rank toward the future commitments which will be undertaken.

5.2. The Client/Guarantor is obliged towards the Bank:

5.2.1 To comply with the laws and regulations in force or with those that may enter into force during the duration of the present Contract and whose non compliance can directly affect its good performance.

5.2.2. To inform the Bank about all direct and indirect amendments to by­laws, legal status, resolutions regarding the changes in the management of the company, before their entering into force, and the Bank has the obligation not to oppose if these changes do not damage its interests.

5.2.3. To present to the Bank the balance sheet and the profit and loss account right after their submittal to the fiscal authorities or any time upon the Bank's request.

5.2.4. To declare to the Bank any other loans and facilities taken from other banks or financial institutions in the country or abroad.

ARTICLE 6. DEFAULT CLAUSE

6.1. Default clause is established according to law.

6.2. Under the present Contract, the followings are expressly considered default cases:

6.2.1. Failure to pay any debt and/or non­fulfillment of any obligation of the Client(s)/Guarantor(s) towards the Bank, stated under the terms and conditions of the present Contract.

6.2.2. Submittal by the Client/Guarantor of documents and/or incomplete or false information and/or omission of communicating the Bank documents and/or information with the purpose of misleading the Bank;

6.2.3. The use of any other amounts and/or rights assigned in favor of the Bank in purposes other than covering the outstanding debts toward the

6.2.4. Alienating the guarantees or collateral securing the facility, for the purpose of avoiding execution, as well as diminishing the value of the pledged business assets by selling them, and/or by not preserving their value or by replacing them with other similar goods having lower technical characteristics, larger wear and tear.

6.2.5. Failing to insure the goods constituted as collateral under the terms of the Contract.

6.2.6. Mortgaging, pledging or assignment in favor of third parties, the goods and claims constituted as guarantees for the facility granted by the Bank through the present contract, without the written consent of the Bank.

6.2.7. Denigration of the Bank in any way.

6.2.8. When any of the above mentioned default cases occur, or anytime default of the Client/Guarantor appears, the Bank may declare callable (as due) all obligations arisen from the present Contract and will immediately debit any or all accounts of the Client/Guarantor of the Bank.

6.2.9. In all default cases, the Client is and will remain directly liable for all direct and indirect financial consequences due to the prior eligibility of the claim, owing the Bank all costs and expenses related to the immediate execution.

6.2.10. Any uncovered debt remained after automatically debiting of the Client's accounts, are considered outstanding and relative provisions of the present contract will apply, the Bank being able to immediately sue and execute the collateral.

ARTICLE 7. OTHER CLAUSES

7.1. The present contract and the accounts statements mentioning the debts of the Client/Guarantor towards the Bank related to the facility, are wrist of execution by law will and without compliance with any other formalities. Any other contract and/or commercial papers etc invested with executory title are acknowledged as valid by the Client/Guarantor, who undertakes not to act against the full recovery of the debt by the Bank while they cannot oppose the Bank the exceptions of: payment of the due thing, enrichment without just cause, absolute voidness, false information.

ARTICLE 8. JURISDICTION The parties undertake to assure and keep the confidentiality of the

conditions of the present Contract. 8.1. Any misunderstanding arising between the parties concerning the present Contract shall be settled on amiable basis, otherwise the parties agree for final settlement through the parties agree for final settlement through arbitration, the authority being to the Court of Arbitration of the Chamber of Commerce which will settle the case in compliance with the own Procedure Rules.

ARTICLE 9. CONFIDENTIALITY The parties undertake to assure and keep the confidentiality of the

conditions of the present Contract

ARTICLE 10. ENTERING INTO FORCE

10.1. The present Contract enters into force on _________, but any withdrawal may be effected only after/while constitution and receiving by the Bank of the documents regarding guarantees, drafted and registered in accordance with the legal procedures, the banking rules and the present Contract.

10.2. The present Contract is drafted in __ (________) originals, one for each party, all having the same validity for the contractual parties.

Signature, Signature (bank) (borrower)

VI. Translate into English:

A. Contractul este un acord, o intelegere intre doua sau mai multe parti

contractante, sub forma scrisa sau verbala. De obicei, pentru aceste contracte societatile, institutiile, organizatiile au pregatite contracte tip pe care le completeaza atunci cand este nevoie. Unele clauze, cu variatii nesemnificative de continut, se gasesc in toate tipurile de contracte, cum ar fi: obiectul contractului, notificari, forta majora, cesiunea, incetarea contractului. Conventiile scrise permit partilor sa­si determine clar obligatiile si drepturile partilor. Daca acestea nu pot ajunge la consens deplin in ceea ce priveste fiecare termen in contract, aceasta nu trebuie sa impiedice semnarea contractului totusi atunci cand majoritatea conditiilor au fost indeplinite si tranzactia este destul de importanta.

Orice notificare/comunicare ulterioara semnarii contractului devine valabila pentru intelegerea intre parti numai daca va fi transmisa prin scrisoare, fax sau telex confirmat. Aceleasi comunicari nu pot deveni parte integranta din contract daca ele nu capata o forma scrisa si confirmata de catre cealalta parte contractanta.

B. Cand o persoana imprumuta o suma de bani sau vinde marfuri pe credit,

este necesara incheierea unui contract de garantie care sa asigure restituirea imprumutului. Acesta se numeste «contract de garantie» (Security and Loan Agreement). Conform acestei conventii, imprumutatul se obliga sa restituie imprumutul la o anumita data sau in transe pe un anumit interval de timp specificat. Un astfel de contract va contine urmatoarele elemente: ­ prezentarea partilor, suma imprumutata, rata dobanzii si data la care trebuie restituit imprumutul. ­ prezentarea bunului care garanteaza imprumutul ­ specificarea datelor la care se vor restitui transele sumei imprumutate ­ obligatia imprumutatorului de a nu deteriora sau instraina bunul folosit drept garantie ­ drepturile imprumutatorului in cazul in care imprumutatul nu isi indeplineste obligatiile ­ drepturile imprumutatului in cazul in care imprumutatorul detorioreaza sau instraineaza bunul cu care se garanteaza imprumutul

B. Documentary credit

I. Answer the following questions: 1. What are the payment and credit instruments used in international foreign trade? 2. Name advantages and disadvantages of using banking payment instruments.

II. Read the text. Fill in the blanks with the following words: 1. merchandise; 2. draft; 3. convention; 4. instrument; 5. protection; 6. shipment; 7. payment; 8. buyer; 9. documents; 10. application; 11. goods; 12. requirements; 13. letter of credit.

The letter of credit, the most widely used a) _________ of international banking, has had a long history as a means of facilitating international trade. It assures the person selling the merchandise of b) __________ if he makes the agreed­upon shipment. It also assures the buyer not to pay until the seller ships the goods. The letter of credit provides mutual c) _________ in dealing with each other. Having settled the international trade d) _________, the buyer and the seller can arrange payment through documentary credit. The buyer requests his

bank to issue a credit letter in favor of the seller by which it undertakes to pay the seller when he will submit certain documents evidencing that he has made the agreed­upon e) __________ The letter of credit specifies the documents to be submitted, the shipping f) ________ and the expiration date. The seller then prepares the documents, ships the goods and draws a g) ________ attached to the documents to be presented to the bank for payment. A typical letter of credit may call for the following h) _________: invoice, bill of lading, marine insurance, packing list, a weigh list, an inspection certificate, a certificate of origin. The issuing bank, dealing only in documents, examines the draft and documents upon receipt, to ensure that the documents conform to the i) ___________. The bank has no legal obligation to inspect the actual j) __________. Once the documents are verified, the bank pays the sight draft presented by the seller and then notifies its customer, the buyer, that the documents have been successfully negotiated and that he must pay the bank in accordance with his k) ____________. When the payment has been completed, the bank releases the documents to the l). _________. The buyer has now the bill of lading which he can present to the shipping company to receive his m) __________.

III. Read the following text and answer the questions: 1. What is a Documentary Credit? 2. What is its role in foreign trade? 3. How many contractual arrangements back the convention of the Documentary Credit? 4. What are the main parties to the Documentary Credit? 5. Explain the advantages of Documentary Credit.

The Documentary Credit or Letter of Credit is an undertaking issued by a bank for the account of the buyer (the Applicant) or for its own account to pay the Beneficiary the value of the Draft and/or documents provided that the terms and conditions of the Documentary Credit are complied with.

Documentary Credit arrangements usually satisfy the seller's desire for cash and the importer's desire for credit. This financial instrument serves the interest of both parties. It is a universally used method of achieving a commercially acceptable undertaking by providing for payment to be made against complying documents that represent the goods and making possible the transfer of title to those goods.

Under a Documentary Credit operation, there exists a distinct triangular contractual arrangement: • the sales contract between buyer and seller •"Application and Security Agreement" or the "Reimbursing Agreement" between the buyer (the Applicant) and the issuer (the Issuing Bank) •Documentary Credit between the Issuing Bank and the beneficiary. If the Documentary Credit is confirmed by another bank then such bank undertakes its own contractual arrangement, in addition to that of the issuing bank, to the Beneficiary.

Each contract is independent and controls the respective relationship between the parties. What is the way to issue a Documentary Credit?

­ The buyer and the seller conclude a sales contract providing for payment by Documentary Credit.

­ The buyer instructs his bank ­ the "Issuing Bank" ­ to issue a Credit in favor of the Seller (Beneficiary)

­ The "Issuing Bank" asks another bank, usually in the country of the seller, to advise, and perhaps also to add its confirmation to the Documentary Credit.

­ The advising or Confirming Bank informs the seller that the Credit has been issued.

The parties to the Documentary Credit are: ­ the issuing Bank ­ the Confirming bank, if any ­ the Beneficiary Other parties that facilitate the Documentary Credit are: ­ the Applicant ­ the Advising Bank ­ the Nominated Paying/Negotiating/Accepting Bank ­ the Transferring Bank, if any

The Documentary Credit provides a specific transaction with an independent credit backing and a clear cut promise to pay and satisfies the financing needs of the seller and the buyer by placing the bank's credit standing, distinguished from the bank's funds, at the disposal of both parties. It reduces or eliminates the commercial credit risk since the bank, which issues an irrevocable Documentary Credit, assures payment. This way, the seller no longer needs to rely on the willingness and capability of the buyer to make payment. It also reduces exchange and political risks not requiring actual segregation of cash, since the buyer is not always required to collateralize his Documentary Credit obligations to the Issuing Bank. It expands sources of supply for the buyers since certain sellers are willing to sell only against cash in advance or a Documentary Credit.

IV. Explain in your own words the operational mechanism of the Documentary Credit figured in the image below:

V. Fill in the blanks: a) acting; b) assume; c) commitment; d) banks; e) forwards; f) country; g) consideration; h) authorized; i) undertake.

There are usually two 1) __________ involved in a Documentary Credit operation. The Issuing Bank is the bank 2) _________ for and on behalf of the buyer. The Advising Bank is a bank chosen to advise the Documentary Credit to the Beneficiary and is usually located in the seller's 3) ___________.

Seller Buyer

Advising Bank Issuing Bank

C o ntra ct

Ad vice o f d o cumen ta ry cre d it

Docume n ta ry cre d it a p p lica tio n

Do cume nta ry cre d it

This second bank can be simply an Advising Bank, or it can also 4) ___________ the more important role of a Confirming Bank. In either case, the Advising Bank can 5) __________ the transmission of the Documentary Credit. If the second bank is simply "advising the Credit" without any obligation on its part, it will mention this fact when it 6) ____________ the Documentary Credit to the Seller (Beneficiary). Such a bank is under no 7) ____________ to make payment, incur a deferred payment undertaking, accept Drafts or negotiate, even though it may be nominated in the Documentary Credit as the Bank authorized to pay, to accept, or to negotiate.

If the Advising Bank has been 8) ____________ or requested by the Issuing Bank to add its confirmation and it is prepared to do so, it will state accordingly on its advice to the Beneficiary. This means that the Confirming Bank will conclude a separate banking contract with the beneficiary, and regardless of any other 9) ____________, must pay, accept or negotiate without recourse to the Beneficiary.

VI. Match the definitions with the types of Documentary Credits: 1. Irrevocable Documentary Credit; 2. Revocable Documentary Credit; 3. Revolving Documentary Credit; 4. Red Clause Documentary Credit; 5. Stand­by Documentary Credit; 6. Transferable Documentary Credit; 7. Back­to­Back Documentary Credit.

a) In the case of a Documentary Credit that revolves in relation to time, e.g. which is initially available for up to $15,000 per month during a fixed period of time, say, six months, the Documentary Credit is automatically available for $15,000 each month, irrespective of whether any sum was drawn during the previous month. Under its terms and conditions thereof, the amount is renewed or reinstated without specific amendments to the Documentary Credit being required.

b) It gives the Beneficiary greater assurance of payment as it constitutes a definite undertaking of the Issuing Bank, provided that the stipulated documents are presented to the Nominated Bank or to the Issuing Bank and that the terms and conditions of the Documentary Credit are complied with, to pay, accept drafts and/or document(s) presented under the Documentary Credit. It cannot be cancelled or modified without the express consent of the Issuing Bank, the Confirming Bank (if any) and of the Beneficiary.

c) It has a special condition incorporated into it that authorizes the Confirming Bank or any other Nominated Bank to make advances to the Beneficiary before presentation of the documents. This condition/clause is introduced at the specific request of the applicant and the wording is dependent upon his requirements. This clause was originally written in red ink to draw attention to its unique nature as it specifies the amount of the advance authorized. This type of Documentary Credit is often used as a method of providing the seller with funds prior to shipment. Therefore, it is of value to intermediaries and dealers in areas of commerce that require a form of pre­financing and when a buyer would be willing to make special concession of this nature.

d) It involves risks to the Beneficiary since the Documentary Credit may be amended or cancelled while the goods are in transit and before the documents are presented, or, although documents may have been presented, before payment has been made, or, in the case of a deferred payment Documentary Credit, before documents have been taken up. The seller then faces the problem of obtaining payment directly from the buyer. It is used between affiliated parties or subsidiary companies, or as a usage of a particular trade, or as a substitute for a promise to pay or a payment order.

e) It is a Credit under which the Beneficiary (First Beneficiary) may request the bank authorized to pay, incur a deferred payment undertaking, accept or negotiate (the Transferring Bank), or in the event of a freely negotiable Credit, the bank specifically authorized in the Credit as a Transferring Bank to make the Documentary Credit available in whole or in part to one or more other Beneficiary (­ies) (Second Beneficiary (­ies)). There may be occasions where the Documentary Credit may be transferred even though it is not authorized by the Documentary Credit regulations; for instance, when the beneficiary has gone into bankruptcy or insolvency, when there are liquidators of the company, when there are corporate reorganizations, etc.

f) The benefit of an irrevocable Documentary Credit may be available to a third party where the Primary Beneficiary uses the Documentary Credit a security/collateral to obtain another Documentary Credit (the Secondary Credit) in favor of the actual supplier. It involves two separate Documentary Credits: one opened in favor of the first or Primary Beneficiary and another one opened for the account of the first/Primary Beneficiary in favor of a Second Beneficiary who is supplying the goods. The First/Primary Beneficiary of the first Documentary Credit becomes the applicant for the second Documentary Credit. Under this arrangement, the Beneficiary or the Secondary Credit obtains greater protection than he would under an assignment of proceeds.

g) It serves as a back­up or secondary means of payment though it is recognized as a primary obligation of the Issuing Bank. In both types of usage, the underlying purpose of the Issuing Bank is to pay for goods supplied or services furnished, as required by the contract between the parties. The difference in application can be expressed by saying that the Commercial Documentary Credit is activated by the "performance" of the Beneficiary. In contrast, this type of convention supports the Beneficiary in the event of a "default".

VII. Fill in the blanks with the missing words: 1. interpretation; 2. terms; 3. potential, 4. convention; 5. issues; 6. trade; 7. responsibilities, 8. delivery

The various parties engaged in international a) _________ must have a general understanding of some of the basic political, legal and economic issues that make up the framework within which such trade takes place. In every international trade transaction there is a seller, a buyer, an agreed product or service as object of their b) __________, which also comprises shipping and delivery details, terms of payment and an insurance cover. The parties to any commercial contract should take care of restrictive governmental policies, and their c) ___________ impact. Exchange controls, tariffs and quota restrictions, expropriation, export and import licensing, trade embargoes, anti­dumping legislation, health requirements, taxation, etc. represent legal and economic d) __________ that are to be considered in any trade transaction.

Payment against e) ____________ for imports cannot give protection against the risk of fraud and goods shouldn't be shipped or service provided merely against a "promise­to­pay paper" which has not been thoroughly examined, authenticated or verified.

Trade f) _________ are also an important element of international contracts of sale. They identify for the parties, what to do with respect to their individual g) _______________. After having conducted a study on the misinterpretation of the trade terms in 1920, The Chamber of Commerce decided to develop rules for the h) ____________ of trade terms which the parties to the contract of sale agree to.

III BANKING DOCUMENTS. OPENING ACCOUNTS. STATEMENTS OF

ACCOUNTS AND BALANCE. CHEQUE, BILL OF EXCHANGE. BANK LETTER OF GUARANTEE

Objectives:

­ becoming familiarized with vocabulary of some banking proceedings and instruments ­ form filling skill ­ interviewing skill

I. Answer the following questions before reading: 1. Do you remember the difference between commercial banks and merchant banks? 2. What is retail banking and wholesale banking? 3. What types of services are rendered by merchant banking and retail banking?

Wholesale banking is the merchant banking specialized in international trade and finance, discounting bills, confirming credit status of overseas customers through confirming houses, acting in the new issue market, (placing shares), in the bullion and Eurobond market. They involve large­size organizations as their clients, who use their wholesale services.

Retail banking services are rendered by commercial banks to private customers for a low charge: different types of deposits and accounts, credit facilities, money transfers. They lend money against securities in the form of overdraft and loan, pay accounts by standing orders, transfer credits.

Some written communication facilities used by merchant banks when involved in financial management of large organizations are to be presented in this unit.

A. BANKING ACCOUNTS AND DEPOSITS

II. Answer the following questions after reading the text: 1. How many types of banking accounts do you know? 2. What are their main characteristics? 3. What are the reasons that a bank must be cautious when opening a new account? 4. What does the authority of opening an account with a bank mean? 5. Why do you think that a referee is needed when opening an account?

One of the ways of increasing banks deposit base, earning funds from investment, lending and offering various services is by attracting people who are willing to open accounts. A bank must exercise caution before an account is opened for any person, because the bank can be sued for conversion, that is, the deprivation of the property of a rightful owner to another person.

Therefore, a bank must always identify the person wishing to open an account. That is, he must prove that he is the person he pretends to be. The person must also give proof that he is a fit and proper person to whom banking services should be given.

It must be also verified if the person has the authority to open an account in his name. If no authority is available, the bank should not open the account. If the person is in employment, the name of his employer should be given. Assuming that a bank has checked the identification of the individual, the next

step is to request the person to complete the application form to open an account and offer the names and the addresses of two persons who would act as referees. Once the references have been proved satisfactory and the funds have been cleared, then the customers can be issued with a checkbook. From the moment the account is opened the banker­customer relationship is in existence.

III. Fill in the blanks the missing words in the following text about accounts and credit cards: 1) accounts; 2) cheque; 3) reference; 4) agreement; 5) cash; 6) branch; 7) deposit; 8) overdraft; 9) facilities; 10) products; 11) agreed; 12) interest.

When providing a) __________, anyone can open a current account with a bank. Check payment may be done with the current b) ________, if there are enough funds in the account. A check card is needed, which makes the bank responsible for the c) ____________ passed, up to the limit stated on the card. This sort of card acts also as a d) __________ card that allows an ATM to withdraw cash even if the bank is closed. A paying­in slip is necessary to record the e) __________, its counterfoil of the bank with its stamp and the cashier initials. An account can be overdrawn with the bank manager's f) _________ However, many banks have as a special product, current accounts with g) ___________ facilities automatically included, for an extra charge. As for the deposit accounts, the customer is required to withdraw money on a withdrawal­ slip handed in at the h) __________ where the account is kept. No checkbook is supplied and there are no overdraft i) ___________.

Banks offer various types of accounts as their j) ___________ e.g. budget accounts, by which the bank pays the customer's bills spread over a twelve­ month period. Saving accounts pay their k) _________ according to the credit balance in the account and the period it is left for. There are some penalties for withdrawing money before the l) __________ date.

IV. Compare the two banking forms. What main differences and similarities did you find? Discuss them in pairs and note them down.

Differences Similarities

Date .........................................

The undersigned............................................

Bearer of I.D./Passport ............................... No..................

Issued by................................. on..................

Personal numeric code.......................................................

Wish to deposit the amount of ............................. (figures and letters and denomination of currency)

representing.................................

and please credit the account .......................... opened in the name of ............... with Euro Bank Romania

............................................... The amount is made of the following types of bank notes/coins:

Pieces Types of banknotes Value

Grand total...............................................

I hereby declare that I am aware of the legal provisions in force regarding cash operations in Lei and foreign currency and I undertake any liability in case of non­compliance.

Deponent's signature

Pursuant to Law no 21/1999 on Money Laundering, the Bank reserves the right to make any inquiries it considers necessary regarding the origin of funds deposited/transacted through any account opened.

_______________________________________________________________________ To be filled in by the bank:

________________________________________________________________________

Branch .......................................

RT Option ....................................

Collected .............................. Retail account ................................

Statistic code ................................

Approval .....................................

Signature and stamp of Signature, date and stamp of the

Bank's Cashier Account Officer

To:................ Branch......................................

Dear Sirs: I hereby request and authorize you to open and/or continue a current account in my name and in accordance with the following particulars: Full name (family name first) Nationality ..........................

Title of account (if different from above)....................................................

Chosen address (e.g. building, etc)

Postal Position

Tel Nos. Off:

Address in country of domicile

Profession........................................... Position

Identification (preferably passport details)

Date and Place of Birth

Employer Name................................................... Address .........................................

References:

Names of other bankers (previous and present):

Introduced by

Name............................................................... Address and Telephone Number ..............................

Statements of account required .................... Monthly Quarterly

Check books 25­50...To be mailed to above address ___________ held until called for

Special instructions (if any)

Initial Deposit

I expressly agree and accept to be bound by the Bank's separate General Conditions for the Operation of Current Accounts (which I hereby confirm having read and understood) and any modification or variation made thereto. Customer signature _________

Place and date ___________

___________________________________________________________________________________ For Bank Use Only

____________________________________________________________________________________ Account number Currency Type Date Opened

Approved by (name/title) .......................

Check list

1. application form completed .......

5. references sought/waived 9.address plates prepared ..........

2. general conditions signed ................

6. references received .............. 10.cheque book issued ............

3. signature cards completed .................

7. opening of account approved ............... 11. computer data entry for completed ...........

V. Translate into English:

A. Contul curent personal se deschide la cererea persoanelor fizice majore, la

sucursale ale băncilor comerciale. La deschiderea contului, titularului i se pune la dispoziţie un carnet de cecuri pentru cont curent personal. Din aceste conturi se pot efectua plăţi periodice pentru abonamentele telefonice, radio, tv, consumului de energie electrică şi de gaze naturale, impozitelor, chiriei, primelor de asigurare.

Titularul beneficiază de dreptul de a imputernici şi alte pesoane care să dispună de sumele depuse in cont prin: ­ clauză de imputernicire ­ dispozitie testamentară ­ valabilă numai după decesul titularului

B. Depozitul cu dobândă capitalizată se poate constitui pe termen de una sau

două luni. Termenul poate fi prelungit automat, pe o perioadă egală cu cea prevăzută în contract. La fiecare scadenţă dobânda se capitalizează şi devine purtătoare de dobândă. Lichidarea depozitului şi plata dobânzilor se fac simultan, la scadenţă. In cazul in care depozitul se lichidează înainte de scadenţa, pentru fracţiuni de timp se acordă dobândă la vedere.

C.

Stimate domnule X, White Bank Romania lansează începând cu luna septembrie 2001 noul card

de plată pentru persoane fizice BPR VISA ELECTRON care va putea fi operabil atât în lei cât şi în orice altă valută.

Cardul VISA ELECTRON este un instrument de economisire, în conceptul White Bank, spre deosebire de alte banci care îl oferă ca instrument de plată.

In cadrul PBR VISA Electron beneficiaţi de dobândă la termen pentru contul de card şi totodată puteţi să vă folosiţi banii dumneavoastră oricând doriţi, deoarece acest card vă permite efectuarea de cumpărături fără numerar, la peste cele 20 milioane de locaţii (puncte de plata) care acceptă carduri VISA în România şi pretutindeni în lume, cu comision 0 la fiecare tranzacţie. Aveţi totodată posibilitatea obţinerii de numerar 24 de ore din 24 la orice bancomat din ţară şi din străinătate.

Apreciind loialitatea dumneavoastră, avem plăcerea de a va oferi gratuit un card BPR VISA Electron, pe care îl puteţi găsi în interiorul broşurii alăturate.

Pentru a activa acest card este suficient să completaţi cererea de emitere anexată şi să o returnati personal, până la data de 1 Decembrie 2001, la una din următorele unităţi ale băncii :……

Cu ocazia returnării cererii de emitere la bancă, vi se va înmâna plicul cu codul dumneavoastra personal de identificare (PIN) iar cardul va fi activat într­un interval de 24 ore.

Transformarea depozitelor existente in «deposit card» nu va afecta dobânda care vi se cuvine.

B. Statements of accounts and balances

VI. Answer the following questions before reading the text: 1. What do you know a statement of account is? 2. Who needs this document to be issued? The bank or the customer?

The bookkeeping systems have been changed completely by computerization. The issue of statements and handling of cheques is automated. Any customer may ask for his statement of account at any time but usually it is

sent out at regular intervals agreed upon by the customer and the bank officer. To preserve the confidentiality and proper secrecy about personal affairs, very precise written instructions are required by the bank before any other person be allowed to have access to the statement of account.

VII. Answer the following questions after reading the text: 1. How are the books kept in a bank nowadays? 2. When does a bank issue a statement of account? 3. Why does the bank officer need precise instructions for handling the statement of account?

VIII. Notice the main characteristics of the following account statement, and translate its parts into Romanian:

ROTBank ACCOUNT STATEMENT

1. Account no._________________________________2. Currency ____ 3. Statement date 4. Statement no. 5. Pages 6. Branch 7. Address 8. Branch code

_____________________________________________________________ Booking reference Narrative Value date Amount _____________________________________________________________ Total credit Total debit Closing balance

IX. Translate into Romanian the following text belonging to the information rendered by an account statement.

Debitările sunt marcate cu semnul minus. Va rugăm verificaţi extrasele de cont şi notificaţi în scris eventualele

reclamaţii. In cazul inchiderii contului, reclamaţiile referitoare la extrasul final trebuie semnalate în scris in timp de patru săptămâni de la primirea lui. Subliniem că, în conformitate cu "Condiţiile generale de Afaceri", în lipsa unei astfel de reclamaţii notificate în termenul menţionat extrasul de cont se consideră acceptat. Rata de schimb folosită în fiecare tranzacţie prezentată în acest extras este în concordanţă cu legislaţia în vigoare. Ratele de schimb stabilite de către banca pentru operaţiunile de schimb valutar şi de către banca centrală pentru alte operaţiuni sunt publicate zilnic şi pot fi consultate la ghiseele băncii

Afişarea ratelor de schimb ca şi confirmările pentru operaţiunile de schimb valutar trebuie considerate ca făcând parte din extrasul dvs de cont.

C. CHEQUE X. Answer the following questions before reading the text: 1. Define a cheque. 2. What kind of instrument is that? 3. How is it used?

XI. Read the following text and answer the questions: 1. When did the cheque system appear? 2. Who is the drawer? 3. What are the responsibilities of the drawee? 4. Who is the payee? 5. What is a cheque book? 6. What is a clearing house and how did it appear?

A. Even by the end of the 17th century, customers of banks were beginning

to settle debts by writing letters to the bank ("the drawee"), instructing it to pay money to the person stated (the "payee") at the same time debiting the account of the person paying (the "drawer"). Such a method of settling debts was very convenient to the customer for it saved him carrying around large sums of money and also permitted him to write his instructions for any odd amount. Above all, to the banker it possessed the inestimable advantage that, if the payee were also one of his customers, he would probably, instead of actually withdrawing the sum authorized, pay the "check" into his own account. If so, the deposits held by the bank would not be touched and the transaction could be recorded by a mere book entry. Consequently, when the right of the large London banks to issue notes was withdrawn they encouraged this cheque system, and from about the middle of the eighteenth century they even issued checkbooks.

The system was more complicated, however, when the drawer and the payee were customers of different banks. The payee would pay the check into his own bank, which would credit his account and then, in order to receive reimbursement, present it for payment with other checks to the drawee (the bank on whom it was drawn). Such a procedure necessitated each bank's holding large amounts of ready money, while clerks had to go from bank to bank collecting the sums in due. In time these clerks hit on the idea of meeting at a suitable coffeehouse in order to set off one check against another and pay over the balance due. Their employers, the banks, took up the idea and in 1773 the first clearinghouse was set up in London, the famous Lombard Street. The result was a great saving in the amount of cash actually used to settle debts. All the cash deposits could now be used as the reserve, and money could again be 'created', not only by issuing banknotes, but also by granting a loan to the borrower. Simply giving him a deposit, which is a credit in his account on which he could draw by writing checks, did this. Later, as each clearing bank adopted the custom of keeping deposits at the Bank of England, it was possible for the daily settlement to be made by an adjustment of their accounts there.

The check system developed rapidly during the nineteenth century as one bank after another lost its right to issue notes.

B. A cheque is a written order to a bank given by someone who has money

deposited with that bank, to pay a certain amount to a person named. There are three parties to the cheque: ­ the drawer is the person who makes out or “draws” the cheque ­ the drawee is the bank on which the cheque is drawn ­ the payee is the person to whom it is made payable

A cheque is payable on demand. It is both. It is both a payment and a credit instrument, negociable through endorsement and largely used in

commercial transactions. A cheque includes the following essential elements:

1. the word “cheque“ included in the text; 2. the exact name of the drawee (the bank that honours the cheque); 3. the drawer’s signature and that of the bearer; 4. the name of the payee; 5. the drawer's signature.

Cheques may be crossed or uncrossed. An uncrossed cheque is an open cheque. A cheque is crossed for safety, with two lines printed across it. The cashing of a crossed cheque is restricted to a person possessing a bank account. It is paid only by the banker on whom is drawn. Crossing may be general or special. A crossing is a material part of a cheque and no person may obliterate it. The drawer of a cheque may cross it either generally or specially.

Cheque Books are printed are books of blank forms for writing out cheques supplied by bankers for the value of the stamp duty only, to all customers having running accounts with them.

There are also cheques which are given to persons traveling abroad. XII. Explain in your own words the following flowchart representing the working of the cheque:

XIII. Fill in the blanks the following missing words: a) credit; b) bank; c) order; d) honored; e) cheque; f) himself; g) parallel; h) cross; i) account; j) fraudulent; k) collection; l) balances.

A cheque is an "unconditional 1) ___________ in writing addressed by one person to another, signed by the person giving it, requiring the banker to pay on demand a certain sum in money or to the order of a specified person or to bearer".

The drawer is the person who draws the 2) __________ and the payee is the person to whom the money is made payable. The bank on whom the cheque is drawn is called the drawee 3) ___________. The drawer and the payee can be one and the same person when a person draws a cheque payable to 4) ___________. The banker has the duty to honor cheques drawn by the customer according to the 5) _________ money available in the customer's account, or within an agreed overdraft limit.

The cheques are paid and debited against the 6) __________ held on customer’s accounts, by being passed through the clearing system.

Unpaid cheques are returned with a reply indicating the reason for not

Issuer Payee

Issuer's Bank Payee's Bank

having been 7) ____________. One precaution taken for ensuring that persons who are not entitled to it, cannot obtain its value, is to 8) ____________ the cheque. In this case, the drawer will make it more difficult for a 9) ___________ person to obtain value for it. Crossing can be general or special. A general crossing is represented by two 10) ___________ lines on the face of the cheque. This kind of cheque may not be cashed over the counter of a bank but must be paid into a banking account for 11) ___________. The name of a particular bank is written across the face of a cheque with a special crossing, that can only be paid into an 12) ____________ with that bank.

XIV. Read the following text and draw the main ideas from it in a written form:

Endorsement is defined as the signature of a cheque by the holder followed by delivery of the instrument whereby the holder of a cheque payable to his order negotiates it to another person, who takes it as a new holder. In order to operate a legal transfer of an order cheque, a correct and genuine endorsement is necessary. Every endorser guarantees the genuineness in all respects of the drawer's signature and all previous endorsements. An endorsement can be blank or special. A blank endorsement specifies no endorsee and its effect is to make the instrument payable to the bearer. The holder writing above the endorser's signature a direction to pay the cheque to, or to the order of, himself or some other person can convert it into a special endorsement. A special endorsement specifies the person to whom, or to whose order, the instrument is to be payable.

XV. Read the text and fill in the blanks the missing words: a) travelers; b) evidence; c) signature; d) charge; e) cash; f) safety; g) account; h) currencies.

Travelers' cheques are the usual method by which 1) _________ take money abroad to provide expenses. They are available in different 2) _________ and are exchanged for local currency at the cashing banker's rate of exchange for sight drafts. At most a passport or some 3) ________ of identity is requested as a condition of cashing. The holder signs the cheque in the presence of the bank officer and his or her 4) ___________ must agree with the one already on the cheque. Travelers' cheques issued but not used, can be either paid into the holder’s bank 5) _________ or cashed by the issuing bank. If lost, most banks replace them free of 6) ____________ Simplicity, general acceptability, cheapness and 7) __________ are the main advantages of the traveler’s cheques. Hotels and shops accept cheques for payment, and they can be used in place of 8) ___________ when banks are closed.

XVI. Translate into English: a) Cecul este un instrument de plată care pune în legătură trei persoane:

trăgătorul, trasul şi beneficiarul. Instrumentul este creat de trăgător, care, în baza unui disponibil constituit în prealabil la o societate bancară, dă un ordin necondiţionat acesteia, care se afla în poziţie de tras, să plătească la prezentare, o sumă determinată, unei terţe persoane sau însuşi trăgătorului aflat în poziţie de beneficiar. Deci, trăgătorul emite cecul, posesorul legitim îl încasează, iar trasul îl plăteşte.

b) Procedura de completare a cecului de călătorie a fost astfel adoptată încât să nu facă posibilă folosirea frauduloasă şi falsificarea acestora. Astfel, titularul va semna pe dreapta documentului, la momentul cumpărării acestuia de la bancă şi în stanga jos numai în prezent prestatorului, atunci când sunt plătite diverse servicii sau mărfuri. Prestatorul va putea astfel să compare cele două

semnături şi să autentifice originalitatea cecului. Dacă prestatorul are dubii în privinţa semnăturii titularului, acesta mai poate semna o data pe spatele cecului. Este foarte important ca semnătura sa fie făcuta în prezenţa prestatorului şi nu înainte, pentru ca altfel cecul nu va fi acceptat.

D. The Bill of Exchange XVII. Answer the following questions before reading the text: 1. What are the main payment instruments used in international trade? 2. What do you know a bill of exchange is?

Bills of exchange were in use long before cheques, and they were first mentioned in history in connection with merchants from Lombardy. At that time the bill of exchange was not a negotiable instrument, and in the Middle Ages, (13­ 14th century) it was not even transferable in payment of debts. From 1663 endorsement was permitted and the bill of exchange was made payable to bearer. It was in 1764 that the bills of exchange and the promissory note were finally recognized by the law.

During the nineteenth century, the bill of exchange was the accepted instrument of financing trade, both internal and foreign, but since then the cheque system has displaced it for internal use, while in foreign trade it has been replaced by other methods, notably the bank draft and telegraphic transfer by which bank deposits are directly transferred from one bank to another. When a nation is trading with another nation, the goods are paid chiefly by the money which is received from the sale of current exports. In normal times, importing and exporting are done by private individuals and firms, and payments are arranged through banks, who exchange the currency of one country for the currency of another provided that they have the necessary reserves of that currency. Such reserves are earned by customers who export to foreign countries.

XVIII. Answer the following questions: 1. When did the bill of exchange appear? 2. What was its historical evolution in the Middle Ages? 3. When it was accepted as an instrument of financing trade? 4. What is the way of doing business nowadays from payment point of view? XIX. Fill in the blanks the missing words: 1) bill; 2) ownership; 3) prior; 4) recourse; 5) person; 6) payment; 7) acceptance; 8) payment; 9) consequences.

The a) _____________ who draws a bill is the drawer; the person on whom it is drawn is called the drawee and the person to whom it is drawn payable is the payee. When the drawee accepts the b) ___________, he is known as the acceptor. An acceptance of a bill of exchange is either general or qualified.

Discharging a bill is the performance of setting free or c) ___________ of a bill, after which all rights are 'extinguished'. When a bill is endorsed, that is its d) ___________ is transferred, it is signed on the back by the endorsee.

Most bills are accepted when presented for e) __________, and duly paid when presented for payment. However, acceptance or f) __________ is refused, then the bill is said to be dishonored by non­acceptance or by non­payment. The person presenting the bill must give notice of dishonor to g) ___________ parties and have the bill 'noted' or protested with a notary public. Failure to take the proper steps promptly may have serious h) _____________. An immediate right or i) ______________ against the drawer and endorser accrues to the holder if the bill is dishonored.

XXI. Look at the following bills of exchange and identify the main parties to the bill:

_______________________________________________

Address 23rd April, 1992

£10,000

Three months after date, pay to me or to my order Ten thousand Pounds, value received.

(Signed) "Y"

To "B" Address _____________________________________________________________

XXI. Explain in your own words the mechanism of payment made with a bill of exchange:

The actual process is as follows. A exports $20 000 worth of wheat to X who, in order to settle the debt, pays Ł10 000 into his bank in London. A, however, wants payment in dollars and so the bank cables its branch in New York, authorizing it to make this equivalent dollar payment. It can only do this if it has these dollars in reserve.

These reserves have been secured by the payment into the bank of $20 000 but B, who has imported British cars to that value. Y is paid from the Ł10 000 which X deposited for the wheat. Thus the two transactions cancel out and the reserves remain the same.

Assume: a) rate of exchange is $2.00 to the £ sterling b) no currency restriction c) A is US exporter of wheat; X is UK importer of wheat; d) B is US importer of cars; Y is UK exporter of cars.

The generally accepted custom of business was that an importer should be allowed a period of grace, usually three months, before payment or the goods

cables to branch in the USA

Branch pays A $20000

pays 20000 to Bank

B

Bank pays £10000

Y

wheat

Reserves $20000 down $20000 up

Reserves £10000 up £10000 down

X Pays £10000 to bank

cables bank in UK £10000 worth of cars

would be required. This was arranged as follows: When Y was ready to ship his cars to B he would draw up a bill of

exchange for the value of £10,000 as shown. This would be sent to B together with copies of the shipping documents, such as the bill of lading and insurance certificate to show that the cars had actually been placed aboard the ship. On receipt of the bill, B would "accept" it, by writing "Accepted" and his signature across the face of the bill, and then return it to Y. This acceptance of the bill by B would be condition for handing over the original bill of lading, the documentary title to the cars.

Y could now do one of three things: 1. ­ he could hold the bill until it matured at the end of 3 months; 2.­ he might be able, after endorsing it to get another merchant to take it in settlement of a debt which Y owed; 3.­ he could sell the bill, usually to a discount house.

The probability is that Y would choose the latter course, and after endorsing it he would take it to a discount house and sell it to a lower price than its face value, the exact amount depending on the length of time it still has to run to maturity, the prevailing short­term rate of interest and the opinion of the discount house as to B's financial standing. Through the process of discounting the Bill of Exchange has advantages to all concerned. The exporter Y can quickly regain liquidity by selling the bill, while B obtains three month’s credit, during which time it is probable that he will be able to sell the cars which he has imported.

Discount houses do not usually hold bills for their full currency, as they are assembled in 'parcels' and sold to the commercial banks who like to have so many falling due each day. There are a few 'running brokers' who act as agents in the process of discounting.

From the risk point of view, the accepted bill is almost as good as cash. However, bills are drawn on firms whose financial standing is little known. Thus, the discount house is either reluctant to discount the bill or will do so only at a fairly high rate of interest. The difficulty can be overcome by getting a firm of international reputation to accept responsibility for payment should B default. It is obvious that any firm accepting such a bill must have adequate knowledge of the credit­worthiness of the trader upon whom it is drawn. Merchant banks that specialized on financing trade possess such knowledge. In their capacity of accepting bills, such merchant banks are known as "acceptance houses". They charge a small commission which is willingly paid because the rate of discount on a "bank bill", that is, one bearing the name of an acceptance house, is lower than on a "trade bill", a bill accepted only by the trader.

The decline of this business has increased the importance of merchant banks ­ the "issuing" business connected with the raising of capital by industrial and commercial firms. Merchant banks also underwrite them and arrange for the payment of dividends to the stockholders as they fall due. They also carry on some domestic banking business and act as trustees and investment advisers to trust funds, pension funds, college endowments.

XXII. Translate into English:

A. Cambia este un instrument cu ajutorul căruia, în calitate de trăgător, vă puteţi plăti o datorie faţă de o anumită persoană (beneficiar) prin intermediul unei alte persoane (tras) care vă era datoare şi căreia îi ordonaţi să plătească beneficiarului sau posesorului cambiei suma respectivă la o anumită dată. Atunci când doriţi să faceţi o plată în condiţiile de mai sus, formularul de cambie va avea următoarele elemente: ­ numele şi semnătura dumneavoastră; ­ numele trasului; ­ adresa, numărul contului şi banca trasului;

­ data şi locul emiterii; ­ locul plăţii; ­ scadenţa; ­ numele beneficiarului; ­ adresa, codul fiscal şi ştampila dumneavoastră; ­ suma în litere şi în cifre; ­ moneda.

Când unul dintre debitorii dumneavoastră doreşte să se achite de obligaţie prin emiterea unei cambii pe care v­o remite, în calitate de beneficiar al cambiei aveţi următoarele posibilităţi de a va exercita drepturile: a)­ să prezentaţi cambia trasului pentru acceptare pentru a fi sigur de plata acesteia la scadenţă; ­ să prezentaţi cambia trasului la plată; ­ să giraţi în favoarea unui terţ faţă de care aveţi o obligaţie; în acest caz va trebui să înscrieţi pe verso­ul cambiei următoarele date:

numele dumneavoastră; numele persoanei căreia îi giraţi titlul (giratarul) data girării semnătura dumneavoastră

dupa care predaţi cambia persoanei în cauză.

b)­ să o scontaţi la banca înainte de scadenţă; vi se va plăti suma înscrisa pe cambie, mai puţin comisionul băncii pentru astfel de operaţii. E. DEMAND GUARANTEES XXIII. Answer the following questions 1. Explain the word "guarantee". 2. What is the difference between guarantee and warrant XXIV. Read the following text and mind the main ideas:

A company entering into a contract for the purchase of goods or services may wish to have security for the counterpart's performance of its obligation, particularly when no other dealing were concluded between the two. Some times ago it was used to require the furnishing of a cash deposit as security, but this became prohibitively expensive. A more convenient safeguard took its place: the provision of a written undertaking by a bank in favor of the buyer payable on demand. These undertakings are known under the common name of bonds, guarantees, demand guarantees and standby letters of credit. The demand guarantees is the substitution of cash guarantee, which is designed to provide the beneficiary with a speedy monetary remedy against the counterpart­underlying contract. The demand guarantee is payable solely on presentation of a written demand and any other specified documents. The guarantor must pay any demand within the amount stated,, regardless whether the underlying contract has in fact been broken and regardless of the loss actually suffered by the beneficiary.

XXV. Answer the following questions after having read the text: 1. When it is necessary to use a Bank Guarantee Letter? 2. What are the main elements of such a document? 3. How many types of guarantee letter do you know? Describe them. 4. Who is the principal debtor? 5. Who is the payee? 6. Who can be the issuer of a Bank Guarantee Letter?

By issuing a letter of guarantee (LG) a bank accepts to pay the obligation of a person to a third party, in case that this person does not fulfill the obligation himself.

The bank issuing a bank guarantee letter accepts a very big risk. The risk is that the bank will pay an amount equal to the one referred on the LG to a third party, under certain conditions. Of course, in such a case the bank pays and then turns to its client and asks for the money. However, the amount of money has collectibility problems.

The bank guarantee is usually given in the form of a letter containing the following essential elements: ­ types of guarantee (simple, solidary) ­ name and address of the guarantee bank ­ the name and address of the legal or natural person to be guaranteed ­ the name and address of the beneficiary ­ the object of guarantee ­ value of the guarantee expressed in a specific amount ­ validity of the guarantee ­ special clauses related to the extension of the date of payment.

A bank guarantee may be: simple ­ when the guarantee bank can request the beneficiary to sue first the principal debtor and only after he has failed to effect payment, to demand execution of the bank and solidary ­ when the beneficiary can demand execution of the bank without previously suing the guaranteed principal debtor and the bank being in no position to object to this procedure, respectively to oppose the benefit of discussion or division.

The content of a letter of guarantee includes usually the following wording: " in consideration of the above, we ________ bank do grant the required guarantee in favor of the above firm and hereby irrevocably and unreservedly engage ourselves, weaving the benefit of discussion, to pay you within ________ days, irrespective of any contestation objection or exception of the said firm, and without being entitled to investigate whether your claim is grounded or not, any amount not exceeding ...........to which our present guarantee is limited."

The commission charged by a bank for issuance of LGs usually depends on the risk accepted and on the maturity of the LG. There are LGs with specific maturity date (they are valid until a specific day and the guarantor has no obligation after this date) and there are also open LGs.

A bank guarantee letter is a document annex used in making payments in international economic exchanges, whereby a first order bank undertakes to make payment, if legal or natural person, called the principal debtor fails to pay a certain amount of money at the stipulated time, in favor of another legal or natural person, called the payee. As a rule, banks issue guarantee letters. As an exception, reputable commercial firms can also issue guarantee letters. They are issued to guarantee an export, an import, open a letter of credit, refund advance money or to participate in a tender. The obligation assumed by the issuing bank of the guarantee letter is a secondary one, while the main obligation to make the payment out rests with the principal debtor. Any obligation deriving from a bank guarantee letter over and above the amount of the principal obligation is null and void. In the event that the principal debtor has not settled his account when a payment is due, the beneficiary approaches banks within a specific date for which the bank guarantee letter has been issued. If the bank fails to effect payment, the beneficiary resorts to the court of law to obtain execution of the guarantee letter and payment of the amount. It is only after he has cashed the amount that the beneficiary must return the guarantee.

XXVI. Match the following missing words: 1. demand; 2. institutions 3. underlying; 4. payment; 5. supplier; 6. performance; 7. guarantee.

A demand guarantee is defined as an undertaking for a) __________ of a stated sum of money on presentation to the party giving the undertaking of a demand for payment as may be specified in the guarantee within a specified period of time. Most of the guarantees are payable on first written b)

___________ without any additional documents. Whereas documentary credits are used to ensure that the supplier is paid, demand guarantees safeguard the buyer against non­performance, late or defective performance by the c) ___________. Demand guarantees are issued usually by banks and recently by other financial d) _________. Demand guarantees are defined by three parties: the account party (or “principal”) which is usually the seller, supplier or the contractor, whose e) __________ is required to be covered by the guarantee and who gives instructions for its issue. The guarantor is the bank or other party issuing the f) __________ on behalf of its customer, the principal. The beneficiary is the part in whose favor the guarantee is issued. This is the other party to the g) ________ contract, the buyer.

XXVII. Explain the following pattern representing the mechanism of issuing the letter of guarantee in your own words:

XXIX. Translate into English:

A. Datorită legislaţiei şi tradiţiei existente in fiecare ţara, în textele garanţiilor

bancare apar termeni ce sunt interpretaţi diferit de părţile interesate. Specialiştii consideră că pentru evitarea echivocului trebuie avute în vedere cele două categorii de garanţii: ­ garanţia bancară independentă prin care banca garantă se angajează să plătească o sumă determinată celui garantat în funcţie de condiţiile precizate în textul garanţiei ­ garanţia dependentă prin care instituţia garantă leagă mai precis obligaţia sa de plată de neîndeplinirea obligaţiilor contractuale de către client faţă de beneficiar.

B. Luând în considerare cele de mai sus, noi, banca _______ acordăm

garanţia cerută în favoarea firmei menţionate mai sus şi ne angajăm irevocabil şi necondiţionat, de a va plăti în _________ zile, în ciuda oricăror contestaţii sau excepţii ale firmei menţionate, şi fără a fi imputerniciţi să investigăm dacă cererea dvs este fondată sau nu, orice sumă ce nu depăseşte _________ la care se ­ limitează prezenta garanţie.

Guarantor

instruction letter Principal

Guarantee

Importer's Issuing Bank Beneficiary

Reimbursement Bank

Exporter

Advising Bank

Corresponding Bank