Capital Lease: Type of lease classified and accounted for by a lessee as a purchase and by the lessor as a sale or financing, if it meets any one of the following criteria: (a) the lessor transfers ownership to the lessee at the end of the lease term; (b) the lease contains an option to purchase the asset at a bargain price; (c) the lease term is equal to 75 percent or more of the estimated economic life of the property (exceptions for used property leased toward the end of its useful life); or (d) the present value of minimum lease rental payments is equal to 90 percent or more of the fair market value of the leased asset less related investment tax credits retained by the lessor. (Also see finance lease.)
Carnet: A Customs document permitting the holder to carry or send merchandise temporarily into certain foreign countries for display, demonstration, or other purposes without paying import duties or posting bonds.
Carrier: The party responsible for transport of goods (shipping line, airline, road haulage company etc.)
Carriage and insurance paid (CIP): Incoterm for all transport modes.
Carriage paid to (CPT): Incoterm for all transport modes.
Case of need: In a collection, party in the buyer's country who is designated by the seller to advise and/or give instructions in the event of problems or disputes. The collection order will specify whether the case of need is authorised to instruct the bank.
Cash Against Documents (CAD): Payment for goods in which a commission house or other intermediary transfers title documents to the buyer upon payment in cash.
Cash cover: In a letter of credit transaction, money deposited by the applicant with the Issuing bank.
Cash in Advance (CIA): Payment for goods in which the price is paid in full before the shipment is made. This type of payment is usually only made for very small shipments or when goods are made in order.
Certificate of Acceptance: Term used in leasing. A document whereby the lessee acknowledges that the equipment to be leased has been delivered, is acceptable, and has been manufactured or constructed according to specifications.
Certificate of analysis/certificate of inspection: Documents that may be asked for by the importer and/or the authorities of the importing country, as evidence of quality or conformity to specifications.
Certiciate of manufacture: A statement which is usually notarized in which the producer of goods certifies that the goods have been produced and are now available to the buyer.
Certificate of origin: Documents that may be asked for by the authorities of the importing country, as evidence of the country of manufacture of the goods and hence qualification for preferential tariffs etc.
CFR - Cost and Freight : A pricing term that indicates that the cost of the goods and freight charges are included in the quoted price.
Charter party bill of lading: Bill of lading issued by the charterer or hirer of a vessel. Unpopular with banks, because situations can arise when the owner of the vessel has a claim on the goods.
CIF - Cost, Insurance, freight : a pricing term indicating that the cost of the goods, insurance, and freight are included in the quoted price.
Clean collection: Collection in which only the financial document (bill of exchange) is sent through the banks.
Clean bill of lading: a receipt for goods issued by a carrier that indicates that the goods were received in apparently good order and without damage.
Collecting bank: Bank in the buyer's country that participates in a collection. The collecting bank may or may not also be the presenting bank, who presents documents to the buyer and claims payment.
Collection: Trading method in which the banking system acts on behalf of the seller, presenting documents to the buyer and only releasing them upon payment (or upon acceptance of a term bill).
Collection order: In a collection, the document in which the seller instructs the banks as to how the collection is to be conducted.
Combined transport bill of lading: Transport document, widely used for containerized shipments, covering more than one transport mode - for example, rail and sea. Has the same general characteristics as a marine Bill of Lading.
Commercial document: General term for documents describing various aspects of a transaction, e.g. commercial invoice, transport document, insurance document, certificate of origin, certificate of inspection etc.
Commercial invoice: Document drawn up by the seller that gives a summary of the commercial transaction (goods supplied, price, means of shipment and so on).
Commitment fee: This term has several meanings. It is the fee charged by a forfeiter for reserving funds to a transaction that was forfeited. It is the fee charged by a negotiating bank for waiving recourse to the beneficiary in the event of non-payment by the Issuing bank.
Common Carrier: An organization that transports persons or goods for a fee.
Compliant documents: Documents presented under a letter of credit that comply with all its terms and conditions. The banks are only obliged to pay the beneficiary if documents are totally compliant.
Confirmed letter of credit: Letter of credit in which a bank (usually) in the seller's country adds its own payment undertaking to that of the Issuing bank. Protects against country risk and bank risk as well as customer credit risk.
Confirming bank: Bank that adds its payment undertaking to a letter of credit. Also see confirmed letter of credit.
Consignee: Party to whom goods are to be delivered.
Consignment: Delivery of merchandise from an exporter to an agent under agreement that the agent sell the merchandise for the account of the exporter. The consignor retains title to the goods until the consigneee has sold them. The consignee sells the goods, collects the commission due and remits the net proceeds to the consignor.
Constructive control: The ability to retain control over goods dispatched to the buyer. Usually maintained through transport documents. Where there is credit risk, constructive control is important to the seller. Constructive control may also be important to a bank who has financed a transaction.
Consular invoice: Commercial invoice prepared in the seller's country by the consulate of the buyer's country. Helps the government of the buyer's country control and regulate imports.
Convertible currency: A currency that can be bought and sold for other currencies at will.
Copyright: The exclusive right to reproduce, publish and sell printed materials, musical work, and art.
Correspondent bank: Overseas bank with whom a bank account has relationships (nostro-vostro accounts) and arrangements for authentication of communications.
Cost and freight (CFR): Incoterm. Seller pays transport costs to named destination, but not insurance.
Cost, insurance and freight (CIF): Incoterm. Seller pays transport costs and insurance to named destination.
Counter trade: The sale of goods or services that are paid for in whole or part by the transfer of goods or services from a foreign country.
Countervailing Duties: Duties levied on an imported good that has been unfairly subsidized by a foreign government. Imposing duties on the good is meant to raise the product's price to a "fair market value".
Counter credit: Another name for back-to-back letter of credit.
Country risk: Risk that economic or political instability in the buyer's country will interfere with the buyer's ability to pay for goods supplied.
Cover note: Insurance document evidencing that insurance cover for a consignment has been taken out, but not giving full details.
Credit Risk Insurance: Insurance that covers the risk of nonpayment for delivered goods.
Currency option: Foreign exchange transaction in which a party buys the right (but not the obligation) to buy or sell a given amount of foreign currency at a given exchange rate at either: a given future date or at any point within a future time period.
Customs: The government authorities designated to collect duties levied by a country on imports and exports. The term also applies to the procedures involved in such a collection.
Customhouse Broker: An individual or company licensed by the government to enter and clear good through customs.