General Terms and Conditions for Payment Method

Definition

General Terms and Conditions for Payment Method. It is the offered payment method. It can greatly affect the price offered by the vendor;the more secure the payment, the cheaper the price. Vendors are looking for more security in payment and because of a high percentage of dropouts paying by ordinary documentary letter of credit. Very few vendors offer this payment option any more. The minimum payment option is an  irrevocable letter of credit (IRDLC) revolving for one month's shipment value. For larger contracts, the vendor is looking for one month's shipment value held by the vendor as surety against the buyer dropping out. In the past, a buyer would contract a quantity say up to 12 times more than the quantity they actually required; they pay for one or two shipments and drop out, after having obtained the benefit of a price offered for a much larger quantity. Buyers would drop out of a contract because they had since found a vendor at a cheaper price.Payment options can vary with the commodity, such as sugar, where payment may be mandatory by a financial bank guarantee with some vendors.