Documentary Sale: A Comprehensive Guide to Its Legal Framework
Definition & Meaning
A documentary sale is a type of transaction where the buyer makes payment upon receiving specific documents that prove ownership of the goods being sold. This process often involves a sight draft, which requires the buyer to pay immediately upon presentation of these documents. Typically, this sale occurs before the actual delivery of the goods, which may already be in transit when payment is made. This method is also referred to as a cash-against-documents sale.
Legal Use & context
Documentary sales are commonly used in international trade and commercial transactions. In legal practice, this term is relevant in areas such as contract law and commercial law. It often involves the use of legal forms and templates to facilitate the transaction, ensuring that both parties understand their rights and obligations. Users can find useful resources and templates on platforms like US Legal Forms to help manage these transactions effectively.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A company in the United States orders machinery from a supplier in Germany. The supplier ships the machinery but retains the title documents until payment is made. Upon receiving the documents, the U.S. company pays the supplier, completing the documentary sale.
Example 2: A retailer purchases clothing from a manufacturer overseas. The manufacturer sends the shipping documents to a bank, which holds them until the retailer pays the required amount. Once payment is made, the retailer receives the documents and can claim the goods. (hypothetical example)