which the collector promises that no court judgment will . a letter explaining when and how payment was made. letter from an attorney to the collector that.
Prof. John H. Munro
Department of Economics
UNIVERSITY OF TORONTO
cambium (Latin): lettera di cambio or di pagamento (Italian); lettre de change (French); Wechselbrief (German: modern, der Wechsel, die Tratte); wisselbrief (Dutch)
A Simple Definition: The bill of exchange or lettre de change (later known as the 'acceptance bill' and the draft) was simply an informal letter by which one merchant ordered his agent-banker in some other city to make payment on his behalf to another merchant in that distant city.
Note that it is an informal command to pay, involving principals and agents; it is not a promise to make payment, by a formal contract, as was the bond, the letter obligatory, and the promissory note.
Basically unchanged from the fourteenth to the eighteenth centuries, the bill of exchange was a dual-functioning international banking instrument that involved:
(a) a loan of funds in one city, and
(b) the transfer or remittance of funds from that city to a city in some foreign country.
The funds lent through this bill were to be repaid at some specified later date, in that foreign city, in the foreign currency of that city. A loan made in country A's domestic currency and repaid in country B's currency thus obviated the necessity of shipping specie and bullion between countries, except when a country's trade was not in balance.
The bill of exchange, as a credit and transfer instrument, required four parties--two principals and two agents--in two cities, using two different currencies, as follows:
- The first principal in city A, the deliverer (1), lends money in A's domestic currency to the second principal, the taker (2), by buying from him a cambium or bill of exchange drawn upon the taker's agent in city B, the payer or drawee (3). The bill is made payable in the local currency of city B, at one to three month's usance, to the deliverer's agent there, the payee (4).
- After collecting the bill, the payee normally purchased a second bill or recambium in B drawn upon some merchant-banker in A, and made payable at usance to the deliverer or his agent there.
- The amount of money that the deliverer received from the recambium was normally larger than the original sum 'delivered' or lent. His profit was produced by a spread on the exchange rates between the two cities. In essence, the exchange rates on both bills were raised, above the mint-par, in favour of the lender.
This can be demonstrated in the two following examples of bills of exchange transactions, from the late 14th and 17th centuries.
EXAMPLE I: Bruges and Barcelona in 1399 - 1400
This first example involves a cambium drawn in Bruges (Flanders) upon a bank in Barcelona (Catalonia); and a recambium drawn in Barcelona upon a Bruges bank to remit the funds to the original lender.
(1) The cambium: drawn upon Barcelona, on 12 December 1399
Al nome di Dio, amen di 12 di dicenbre 1399
Paghate per questa prima al usanza a Domenicho Sancio schudi seicento a s.10 d.5 per i quali 600 a s.10 d.5 per sono per la valuta da Jachopo Ghoscio, e ponente a nostro chonto chosti. Idio vi guardi.
Giovanni Orlandini e Piero
Benizi e chonpagni in Bruggia
Acettata a di 11 di gennaio 1399
[on the back] Francescho da Prata e chonpagni
Translation from the Italian
In the name of God, amen 12th of December 1399
Pay at usance by this first [letter of exchange] to Domenico Sancio six hundred écus at 10s 5d [Barcelonese] per écu, which 600 écus at 10s 5d per écu are for the value received [here] from Jacopo Goscio; and charge [this amount] to our account. God be with you.
Giovanni Orlandini and Piero
Benizi and Co. in Bruges.
Accepted, 11th of January 1399 [1400 n.s.]
[on the back] Francesco da Prato and Co.
First [letter of exchange]
Source: Raymond De Roover, Money, Banking and Credit in Mediaeval Bruges (Cambridge, Mass. 1948), pp. 56, 72; from the Datini Archives of Prato, pp. 1146.
(2) The recambium: drawn upon Bruges, on 12 February 1400
In the name of God, amen 12th of February 1399 
Pay at usance by this first letter of exchange to Jacopo Goscio [the sum of] 625 écus at 10s 0d Barcelonese per écu, which 625 écus at 10s 0d per écu are for the value received here from Domenico Sancio; and charge this amount to our account.
God be with you.
Francesco del Tovaglia and
Co. in Barcelona
Accepted, 11th of March 1399 
[on the back] Giuliano Zaccheria and
Co. in Bruges
First [letter of exchange]
1) at usance: the period of time from the date the bill was drawn to its maturity, the date on which it was to be collected. From northern European cities to Italian cities, usance was customarily two months from date; from those northern cities to Barcelona, one month from 'sight' or date it was received and 'accepted'; from London to Bruges, Antwerp, or later Amsterdam, it was one month from the date of the bill. Bills could also be drawn for half, double, and triple usance.
2) the écu:[= shield], with the symbol . Here it was not the famous French gold coin, but rather a Flemish money-of-account or system of reckoning equal to 22 current Flemish silver pence = 22d = 1s 10d gros of Flanders.
3) Moneys-of-account: both Flanders and Barcelona then used the almost universal system of money-of-account, by which one pound of money (livre, lira, pond, Pfund) contained 20 shillings; and each shilling, 12 pence: so that �1 = 20s = 240d.
4) first letter of exchange: to insure the transaction against theft, loss, or fraud, several bills, each numbered consecutively, would be issued. This bill was thus the first to be issued; and if it arrived safely, it would be the one redeemed, thus cancelling the subsequent bills.
5) n.s. = new style calendar beginning 1 January. Before 1583, the New Year in the French calendar commenced on Easter day; in the Venetian calendar on 1 March; (in the English calendar, 25 March, until 1752.)
The Merchant-bankers transacting the bills:
A. The cambium: the initial bill of exchange
1. The deliverer or remitter (datore or rimettente):
Jacopo Goscio in Bruges, who lends or 'delivers' 600 écus, worth 1s 10d or 22d gros Flemish each. The total value = 600 x 22/240 = �55 0s 0d gros Flemish; and this sum is lent to Giovanni Orlandini-Piero Benizi Co. in Bruges by 'buying' a bill of exchange from them drawn on Barcelona.
2. The taker or drawer (prenditore or traente):
The Orlandini-Benizi Co. in Bruges, who thus borrow the 600 écus by `selling' the bill of exchange to Jacopo Goscio; they `draw' this bill upon Francesco da Prato and Co. in Barcelona. Presumably the Orlandini-Benizi Co. maintain funds on deposit with the Francesco da Prato Co. bank in Barcelona; and thus, in effect, the Orlandini-Benizi Company, by this bill of exchange, is selling a claim to this foreign bank balance -- a claim to its funds on deposit there. The Orlandini-Benizi Company would use these borrowed funds to purchase Flemish woollens, which they would ship for sale to Barcelona, depositing the proceeds from the sale in its bank account with Francesco da Prato and Co. there.
3. The payer or drawee (pagatore or trattario):
Francesco da Prato in Barcelona, who 'accepts' the bill on 'sight' on 11 January 1400, thus agreeing to make the stipulated payment at usance, on the bill's maturity, to the designated payee in Barcelona, Domenico Sancio. This payment will be made in the currency of Barcelona at the stipulated rate; and the amount to be paid is: 600 écus x 10s 5d Barcelonese = 600 x 10.4167s = 6,250s = �312 10s 0d Barcelonese currency. Note that this payer is also extending credit to the drawer (taker), since he is guaranteeing payment, even if the drawer fails to deposit sufficient funds in his account with the payer in time to redeem the bill. Normally, however, the drawer would maintain a sufficient balance in his bank account; and, as noted above, the drawer was thus selling a claim to this foreign bank balance. Francesco da Prato might also act as the mercantile agent for the Orlandini-Benizi Co. by arranging for the sale of the imported Flemish woollens. From the proceeds of that sale, as also noted above, he would be able to redeem the bill of exchange, without endangering his bank balances.
4. The payee (beneficiario):
Domenico Sancio in Barcelona, who received the bill in the mail from the deliverer, Jacopo Goscio, and he presents it for `acceptance' to the payer. On the bill's maturity, he 'collects' the bill, worth, as noted above, �312 10s 0d Barcelonese. The records indeed do show that on 11 January 1400, the date of acceptance, this sum of �312 10s 0d Barcelonese was charged to the account of Orlandini-Benizi and credited to the account of Domenico Sancio by Francesco da Prato. This sum was paid to Sancio on 11 February 1400, by 'assignment in bank' or bank-account transfer.
B. The recambium: the second or return bill of exchange
1. The deliverer:
Domenico Sancio, who was the payee in the original cambium. He lends the proceeds of the cambium, �312 10s 0d Barcelonese to Francesco del Tovaglia in Barcelona by buying from him a bill of exchange drawn upon Bruges. He is thereby able to remit these funds to the original deliverer, Jacopo Goscio.
2. The taker:
Francesco del Tovaglia in Barcelona, who thus borrows the said sum of �312 10s 0d Barcelonese by selling a bill of exchange drawn upon Giuliano Zaccheria in Bruges. Del Tovaglia might use these borrowed funds to buy Spanish wine and leather for export to Bruges.
3. The payer:
Giuliano Zaccheria in Bruges, who accepts the bill on 11 March 1400, agreeing to redeem or pay the bill on its maturity, to Jacopo Goscio in Bruges. He might also act as the commercial agent for del Tovaglia, selling the imported wines and leather from Spain, and thus using some of the proceeds to redeem the bill. Again, he acts as a bank-creditor for the drawer.
4. The payee:
Jacopo Goscio, the deliverer on the initial cambium, who presents the bill for acceptance and then 'collects' the bill on its maturity, 11 april 1400, for the sum of 625 écus = �57 5s 10d gros Flemish. That is, �312 10s 0d Barcelonese divided by 10s 0d = 312.5/0.5 = 625 écus x 22/240 = 625 x 0.09166 = �57.29166 = �57 5s 10d. gros Flemish.
Calculation of the Rate of Interest or Profit on the Bill.
The interest or profit was included within the exchange rates. In this example of cambium and recambium, the original deliverer Jacopo Goscio has made a profit of 25 écus (625 - 600), or �2.5s.10d. gros Flemish, for a period of four months. His perannum rate of return would thus be: 12/4 x 25/600 x 100 = 3 x 0.041666 x 100 = 12.5%.
Assume that the actual rate of exchange on the Flemish and Barcelonese currencies was mid-way between the two rates quoted in these bills: 10s 2 1/2d Barcelonese per Flemish écu, so that 600 écus = 600 x 122.5/240 = 600 x 0.510417 = �306 5s. 0d. Barcelonese.
(a) the profit on the first bill would be: �312.500 - �306.250 = �6.250 or �6 5s 0d Barcelonese = 12.245 écus.
(b) the profit on the second bill would be: 625 écus - 612.245 écus = 12.755 écus [= �57.292 - �56.123 = �1.169 = 12.755 écus].
(c) the total profit on the two bills was thus: 12.245 + 12.755 = 25.000 écus, as calculated above.
On both bills the exchange rate has been artificially raised in favour of the lender (who would otherwise not 'deliver' or lend money by buying bills). While such an increase in the exchange rate is quite clear on the first bill--from 10s. 2 1/2d. to 10s. 5d. per écu -- how is the second rate higher? How can 10s.0d. per écu be higher than 10s. 2 1/2d? Simply because in the second bill, the Barcelonese currency has been divided by the exchange rate to obtain the required number of Flemish écus to be repaid (while in the first bill, the écus were multiplied by the exchange rate to obtain the required number of Barcelonese pounds). Thus the exchange rate is higher than the mint-par in the second bill in the same sense that 1/3 is larger than 1/4.
In all bilateral international bills of exchange transactions, one country's currency is taken to be the 'head of the exchange': the fixed monetary unit by which the other currency is quoted, in variable amounts. In this case Flanders is the 'head of the exchange' and the Flemish écu is quoted as being worth so many shillings and pence of Barcelona. When the money market is in equilibrium, the exchange rate for 'bills at usance' will be higher in the city that serves as the 'head of the exchange' than in the other. The difference in the two rates represents the positive rate of interest for that period of usance. This return was not, however, predetermined and fixed in actual bills of exchange transactions; and thus, strictly speaking, it was profit and not interest. Hence bills of exchange escaped the Church's usury ban. The return was uncertain because, before the second bill or recambium was drawn, the exchange rates might change adversely, as the result of any combination of factors: a change in either country's mint-par by coinage debasement or renforcement, a change in the official or market evaluations of gold and silver, changes in either country's trade or overall balance of payments, speculative buying and selling of bills in the money markets--or indeed changes in the market rate of interest. Bankers did lose: but they gained more than they lost.
N.B. The Bill of Exchange as a Transfer Instrument:
The examples given above assume that the bill of exchange was utilized essentially as a credit instrument to finance international trade, and that its transfer functions were merely to facilitate payment; but the bill of exchange could also be used primarily as a transfer instrument, to effect a payment owing in a foreign city. In this instance, the original roles of deliverer and taker, as lender and borrower, respectively, would be reversed, so that the deliverer became the borrower and the taker became the lender or creditor. Let us reconstruct the first cambium, of 1399, using the same principals and agents, to see how this would work:
The deliverer (datore) in Bruges, Jacopo Goscio, who is now the remitter (rimettente), owes the sum of �312 10s 0d Barcelonese to some creditor in Barcelona, whose banking agent there is Domenico Sancio (payee). Possibly company partners or family members of Jacopo Goscio in Barcelona have borrowed this sum from or via Domenico Sancio; or possibly Jacopo Goscio has imported goods from Barcelona into Bruges, and now must arrange payment for them. So, Jacopo Goscio now buys a bill of exchange from the taker (prenditore or traente), Orlandini and Benizi Co. in Bruges, for the sum of 600 Flemish écus (22d gros) = �55 0s 0d gros Flemish, at the agreed upon exchange rate of 1 Flemish écu = 10s 5d. Barcelonese. The Orlandini-Benizi Co. draw their bill of exchange upon their banking agent in Barcelona, the payer, who is Francesco da Prato Co., which is ordered to make payment to the aforementioned and stipulated payee, Domenico Sancio in Barcelona. Thus, on the redemption or payment date stipulated in the bill, 11 January 1400, Francesco da Prato Co., as the designated payer, do redeem this bill, and make payment for the sum of �312 10s 0d Barcelonese, into the bank account of the payee, Domenico Sancio.
And so in this fashion, the deliverer Jacopo Goscio has honoured his debt to his Catalan creditor in Barcelona, Domenico Sancio. Obviously, in this case, there is no need for a recambium.
EXAMPLE II: 17th Century Bills: Leghorn and Amsterdam, 1684
Livorno [Leghorn, Italy], the 2nd of October 1684.
At usance, pay this our first bill of exchange, our second and third not being paid, pay unto Mr. James Twyford or order the sum of dollars one hundred at 55 1/2 d per dollar, for value received here of Captain William Fisher and place it to account as per advice, �23 2s 6d.
Brokinge Parker Holditch
Accepted, John Brokinge.
Source: Joan Thirsk and J. P. Cooper, eds., Seventeenth-Century Economic Documents (Oxford, 1972), no. V.42, p. 661.
1) or order: payable to the holder, bearer, or possibly the agent or creditor of the payee. Bills of exchange had now become negotiable credit instruments, transferable by endorsement.
2) doller: the Dutch rijksdaalder or 'Rix doller', as it was known in England.
The Merchants and Merchant-Bankers:
1. The deliverer: Captain William Fisher, in Leghorn, who lent �23 2s. 6d. [�23.125] to Brokinge Parker Holditch, by buying from him a bill of exchange drawn on Amsterdam.
2. The taker: Brokinge Parker Holditch, in Leghorn, who thus borrows the said �23 2s. 6d. by selling a bill of exchange drawn on Amsterdam. He might thus have used the borrowed funds to purchase Italian textiles (or English goods received from the Turkey trade) for export to Amsterdam.
3. The payer: John Brokinge, in Amsterdam, who accepted the bill and thus agreed to pay it to the designated payee, James Twyford, 'at usance', on the date of maturity. Brokinge might also have acted as the commercial agent for the taker, Brokinge Parker Holditch, by arranging for the sale of the goods imported from Leghorn; and again he would have used some of the proceeds to redeem the bill.
4. The payee: James Twyford, in Amsterdam, who receives the bill in the mails from the deliverer, William Fisher; presents it to the payer for 'acceptance'; and then collects the sum of 100 Rix dollers on the date of maturity. [�23 2s. 6d. divided by 55.5d/240d. = 23.125/0.23125 = 100 Rix dollers.] Twyford, however, might have sold the bill at discount some time before its maturity; in that case the holder of the bill would collect it on maturity.
Construct a return bill or recambium, drawn on Leghorn, in order to remit the funds collected in Amsterdam to the original deliverer, William Fisher, in Leghorn. Assume that the rate of exchange quoted in Amsterdam is 58d. per Rix doller. Note that the Rix doller here serves as the 'head of the exchange'.
The amount to be redeemed on the recambium would thus have been: 100 x 58/240 = 100 x 0.24167 = �24.3s.4d. - �23.2s.6d. = 24.167 - 23.125 = 1.042 = �1.0s.10d. If the two bills took a total of four months to be transacted, the per annum rate of return would have been:
12/4 x 100 (1.0412/23.125) = 3 x 0.04504 x 100 = 13.51%
III. Modern Acceptance Banking (Accept-Krediet):
An acceptance bill is simply the more modern form of the bill of exchange in financing international trade, with a few differences.
(1) The acceptance bill is essentially the same as earlier forms of the bill of exchange in that a merchant, acting as a principal, orders or commands his agent-banker to make a payment on his behalf to another, specified merchant, in another city. Note once more that this bill is an order to pay and not a promise to pay (as in a letter obligatory or promissory note).
(2) The essential difference is that the bill involves the loan of commodities (i.e. grain, lumber, wine) rather than of money: the acceptance bill is, therefore, a form of straight sales credit.
(3) The four parties in the acceptance bill, therefore, are the seller and buyer of the commodities in city A (transaction city) and their two banking agents abroad, who arrange payment or redemption of the bill in city B (payment city): the accepter or payer of the bill, and the payee.
Example: a Bordeaux merchant instructs his commercial agent in Danzig to buy a shipload of grain and to arrange payment for that grain by drawing an acceptance bill for 500 Dutch florins upon a designated Amsterdam bank, ordering that bank to pay the designated merchant or bank in Amsterdam 500 florins on some future date, usually within three months.
(1) The agent-buyer in Danzig is thus borrowing the grain from the grain seller, who is selling it on credit. Having received the acceptance bill from the Bordeaux merchant, the buyer's shipping agent in Danzig gives the bill to the Danzig grain merchant.
(2) The Bordeaux merchant sends a copy of his instructions to his Amsterdam bank (bank A); meanwhile, the Danzig grain merchant sends the bill he has received to his own bank in Amsterdam (bank B), or to his merchant-agent there. That agent or bank B, acting for the Danzig grain-seller, takes the bill to bank A, as the agent for the Bordeaux merchant; and that bank A receives the bill and writes on the back: 'we accept', meaning that it promises to honour bill and make full payment on the date of maturity (redemption date).
(3) Hence the term 'acceptance banking'; and that bank is called an 'acceptance bank'. That bank might agree to make payment, cash the bill, ahead of time; but obviously, as indicated earlier, at discount. The Amsterdam acceptance-bank (A) has thus agreed to extend financial credit to the Bordeaux merchant.
(4) If that Bordeaux merchant maintains an account there, a credit balance in that bank, he can simply instruct that bank to recover both its credit advance and its banking costs (which might also include shipping insurance premiums) and its profit, by a simple account-transfer, debiting the Bordeaux merchant's account.
(5) If the Bordeaux merchant does not have an Amsterdam bank account, then the Amsterdam acceptance bank would draw a second bill upon a Bordeaux bank (acting for the Bordeaux merchant) for the sum advanced plus all costs and bank profit.
•Damages=Value of ―perfect hand‖ (as promised) MINUS value of hand P acknowledged that in a letter, and promised to hold onto the money, and pay.
An irrevocable letter of credit is a guarantee from a bank, issued in the form of a letter. These letters allow companies (and individuals) to do business with confidence. Letters of credit are often found in international trade, but they can also be used for domestic transactions. The details of each deal are not as important as the concept of a bank promising to pay a “beneficiary” once something happens.
That somethingmight be: An exporter ships goods, a customer fails to pay on time, a contractor does not complete a project, or somebody, somehow, does not perform whatever obligation they agreed to. When you do business with somebody in a foreign country (or even with a brand new customer or vendor in your home country), you have to trust them to some degree. Perhaps you've never met the person you're dealing with, and you might not know much about their company.
If you're selling something to that company, will they ever pay for it? If you're buying something and you send money, will they ever deliver the goods? Without some guarantee, doing deals is risky. Irrevocable letters of credit can reduce risks for both buyers and sellers.
To understand irrevocable letters of credit it's important to understand two components: They are letters of credit, and they are irrevocable, meaning they can’t be changed or canceled unless everybody agrees to it. Let’s explore both of those components, review some advantages and disadvantages, and look at an example of a letter of credit in action.
Letters of credit are agreements between a buyer (often an importer) and the buyer’s bank. The bank agrees to pay the seller (the exporter) as soon as certain conditions are met. To meet those conditions, the seller typically needs to ship the buyer's goods on time and meet any other requirements listed in the letter.
This agreement provides security to both parties, the buyer and seller: The buyer knows that she won't pay anything until goods have been shipped or services have been performed, and the seller knows that she will get paid as long as she does everything specified in the letter. However, letters of credit don’t completely eliminate problems. Buyers and sellers are always taking risks, even with an irrevocable letter of credit.
For sellers, letters of credit are especially beneficial because the seller gets to rely on the strength of the bank, not the strength of the buyer. When you sell something, how do you know you’ll get paid, especially if you’ve never done business together before (and how many customers overseas are willing to pay you in advance)? Even if you trust that your buyer intendsto pay, bad things can happen, and your buyer might not have cash on hand when it’s time for you to get paid.
With an irrevocable letter of credit, you don’t have to worry about the buyer’s financial situation. Once the letter has been issued, you’ve got a promise from the bank that issued it. The bank will pay you as soon as you prove that you’ve met the conditions spelled out in the agreement, so you need to evaluate how stable and reputable the bank is (as opposed to evaluating every single potential buyer in every single country).
However, you have to meet the requirements of the letter (with 100% compliance) to get paid. If anything is off, the bank can refuse payment. That includes everything from major problems (sending the shipment early or late) to seemingly minor problems (typographical errors in the agreement, or substituting the word "Suite" for "Unit" in your address). The bank is in the business of verifying documents, and they don't care about anything else.
For buyers, letters of credit can help ensure that something has been done. The seller didn't just accept your payment and fly the coop – he shipped something. However, an irrevocable letter of credit is about documents and has nothing to do with the quality of goods shipped. Your bank will make payment once your seller provides documents showing that a shipment was made. You won't know what's in the shipment until it arrives (and the money will be gone). To manage risk, you can require that an inspection certificate be one of the required documents.
The easiest way to understand a letter of credit is to look at an example. You can see a visual example of the process, or you can read through the example below. This is a general example to illustrate the concept, and any deals you do will certainly look different. There might be more steps (and intermediaries) involved.
When does Sally pay her bank? It depends. She might have to provide the funds up front (but she’s not sending the money to George, she’s just letting the bank hold onto it until the documents arrive). Or, if she has sufficient credit and collateral, her bank might wait and ask for the money after the letter of credit comes back with the required documents. Finally, Sally’s bank might issue a loan to Sally as part of the letter of credit, and she’ll repay the loan over time.
Letters of credit, in general, work as described above. But what about irrevocable letters of credit? An irrevocable letter of credit is simply a letter of credit they cannot be changed or canceled without the permission of everybody involved: the buyer, the seller, and any banks involved.
It is extremely difficult to find a letter of credit that is not irrevocable. However, it's always worth verifying whether or not you have an irrevocable or a revocable document. It is difficult to plan when things can change at any time.
Sellers generally want letters of credit to be irrevocable because they can get burned if they produce and ship goods without any guarantee of payment. But buyers may also want things set in stone: they don't want sellers to ship goods late or change order quantities without discussing things first. Ultimately, the greatest risk falls on sellers, and you should avoid selling anything with a revocable letter of credit.
If you need to obtain a letter of credit, talk with your bank. You’ll probably need somebody in the international trade (or similar) department. Don’t try to craft a letter of credit yourself, and don’t “adapt” a letter of credit that somebody else used.
What’s the big deal? If any detail is off, you risk an expensive legal battle (possibly overseas, where laws may be different from what you’re used to), and you might not get paid for shipments you send. You might save a few bucks by doing it yourself, but the risks are significant. For sellers, it's a good idea to look at alternatives to letters of credit, including trade credit insurance, which might be less expensive, and different types of letters of credit.
Payment plan template and Repayment proposal.
If you cannot make immediate payment of a whole debt, make sure to detail your offer to pay off the debt by regular fixed instalments with this letter proposing payment in instalments. You can also use this application for instalment payment to try and stop creditors from taking further action against you. Thoroughly outline the details of your proposal to pay in instalments so that creditors are confident in your ability to repay your debt.
Use this letter proposing payments in instalments:
This letter proposing payment in instalments covers:
A letter proposing payments in instalments is an offer by the debtor to pay off an outstanding debt by regular fixed amounts over a period of time.
A proposal to pay in instalments will help to set out your financial ability to pay off a debt and avoid the need to go to court.
If you accept that you owe money to an individual or company but you currently don't have the financial resources to pay off the outstanding debt immediately, then you may offer to want to pay in instalments. This will show good intention and willingness to pay off a debt and can stop a creditor from taking further action. It can also help with your cash flow, especially if you're a business.
This letter proposing payment in instalments is merely an offer and does not constitute a legal agreement. If the creditor accepts your offer through a Letter accepting payment in instalments, then that agreement will be a formal legal agreement.
You can choose to make repayments either weekly or monthly depending on your financial situation.
You can choose to make a request to the creditor to freeze any interest, however, the creditor does not have to accept this request. This will depend on your relationship with the creditor and the strength of your bargaining position.
You can choose to make a request for the creditor to consider any good credit history you have. This will help assure the creditor of your ability to meet the repayments on time and give you a stronger position when proposing payments in instalments.
It may be that the creditor isn't satisfied with the terms of the proposal. If this is the case, you should consider negotiating with the creditor and trying to come to an arrangement that works for both parties.
If you think you're going to struggle to pay off a debt through an instalment plan, you should consider contacting the National Debtline, which is a free and impartial service to help those who are struggling with debt and finances.
Ask a lawyer for:
This letter proposing payment in instalments is governed by the law of England and Wales or the law of Scotland.
Create a Demand For Payment Letter with step-by-step instructions. It is sent to a non-paying party, detailing an outstanding debt and.
This Debt Settlement Agreement (the “Agreement”) states the terms and conditions that govern the contractual agreement between [COMPANY] having its principal place of business at [ADDRESS] (the “Debtor”), and [COMPANY] having its principal place of business at [ADDRESS] (the “Creditor”) who agrees to be bound by this Agreement.
WHEREAS, the Debtor is indebted to the Creditor in the amount of [WRITTEN DEBT DOLLAR AMOUNT] dollars ($[NUMERICAL DOLLAR AMOUNT]) (the “Debt”); and
WHEREAS, the Debtor wishes to settle the Debt in full according to the terms of this Debt Settlement Agreement.
NOW, THEREFORE, In consideration of the mutual covenants and promises made by the parties hereto, the Debtor and the Creditor (individually, each a “Party” and collectively, the “Parties”) covenant and agree as follows:
ACKNOWLEDGMENT OF DEBT. The Debtor agrees and acknowledges that it is indebted to the Creditor in the full amount of the Debt.
SETTLEMENT AMOUNT. The Creditor agrees to accept from the Debtor, payment amount of [WRITTEN SETTLEMENT DOLLAR AMOUNT] Dollars ($[NUMERICAL DOLLAR AMOUNT]) as full repayment of the Debt outstanding to the Creditor at the date hereof, subject to the terms and conditions of this Agreement. Payments shall be made according to the schedule attached hereto as Exhibit A (the “Settlement Payments”).
TIME IS OF THE ESSENCE. The Parties agree and acknowledge that time is of the essence with regard to the Debt Settlement Payments.
PandaTip: Stating that “time is of the essence” ensures that the deadlines will be viewed as an essential term of the contract and missing such deadlines will be deemed a breach of the Agreement.
NO MODIFICATION UNLESS IN WRITING. No modification of this Agreement shall be valid unless in writing and agreed upon by both Parties.
FULL INTEGRATION. This Debt Settlement Agreement supersedes any prior agreements, understandings, or negotiations, whether written or oral.
PandaTip: In other words, this agreement is now the controlling agreement with regard to the Debt and in any event the terms of this agreement are different than any others signed previously, the terms of this agreement are the ones that will be used.
FURTHER ASSURANCES. The Parties shall make any further assurances as may be necessary to implement and carry out the intent of this Agreement.
PandaTip: In other words, if needed, the Debtor and the Creditor will take additional actions in order to ensure that the Debt will be settled so long as the terms of this agreement are followed.
VENUE. This Debt Settlement Agreement and the interpretation of the terms herein shall be governed by and construed in accordance with the laws of the State of [STATE]. The Parties irrevocably submit to the exclusive jurisdiction of the federal and state courts located in [COUNTY] County, [STATE].
IN WITNESS WHEREOF, each of the Parties has executed this Debt Settlement Agreement, both Parties by its duly authorized officer, as of the day and year set forth below.
[NAME], Letter promising payment DATE
[NAME], Letter promising payment DATE
Note of three letters promising to pay a debt. ANSWER: IOWEYOU. Previous LevelCodyCross London Group Puzzle 4 AnswersNext Level.