Forfaiting is a technique used for financing international trade of great flexibility and capable of creative application. It can be used with an almost unlimited number of instruments such as traditional letters of credit, promissory notes and bills of exchange as well as with newer forms and structures.
The Uniform Rules for Forfaiting sets out for the first time a set of rules to govern and assist this important sector of trade finance. The URF covers both the primary market, in which deals are originated from exporters and other sellers, and the secondary market in which these transactions can be traded between banks and other suppliers of finance thus supplying a deep source of liquidity. Important issues covered include: how sales are concluded, the nature of satisfactory documentation and recourse to sellers.
To assist practitioners in applying the URF a non-binding set of model forms is included.
