Documentary collections

 

 

Documentary collections

In cross-border trade, a documentary collection (D/Cs) is to be seen more as a payment condition than a form of collateral. From neither the exporter’s nor the importer’s perspective does this method afford the security comparable with that of a documentary LC. This applies to both guarantee of payment and assurance of quality and quantity of the goods. The costs of a transaction are therefore significantly less than those of a corresponding documentary LC. Under German law, this is referred to as a “Zug-um-Zug” deal, a synallagmatic or reciprocal and simultaneous transaction.

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