Home › Forums › Letters of Credit

Payment terms

3 replies [Last post]
Sun, 09/19/2010 - 02:18
Impex consulting
Offline
Joined: 07/06/2010
Posts:
Printer-friendly versionPDF version

Dear Sirs

Could you please give me some clarification about the below payment terms. This regards to a Lettre of credit amount of  EUR 98 000. This is a supply of Portable SHF System (Telecommunication equipment) which requires to be installed after delivery.

The details of payments are as follows:     

 - EUR 42000 (Shipment) 

- EUR 42000 (PAT)

- EUR 14000 (FAT)                                                                                           Please I would be glad if you kindly give me the definition of PAT and FAT in this payment terms.

Thank you indeed.

‹ Booking LC in the Trade Finance System Re: Bank Instrument ›
Top
Sun, 09/19/2010 - 13:49
#1
KKehrer
Offline
Joined: 10/15/2009
Posts:
Payment terms

Dear Yacoub !

Well, i have not yet heard about a PAT and FAT, but I suppose the meaning of a PAT is Pre Accep Tance, a document which certifies the receipt of goods at buyers premises, but not yet installed.The FAT could me F inal Accep Tance, which will be issued after installation and successful test run of the system.

Both interpretations are from my point of view, maybe other participants of/in the forum have other explanations, but you have to supervise the second and third part with priority to match any dates for such docs if stated in the credit. The first part is clear - please follow the field 46A of LC concerning docs required for EUR 42.000,00. Other comments highly appreciated. Have a great further time. rgds Kurt.

Top
Sun, 09/19/2010 - 23:09
#2
Impex consulting
Offline
Joined: 07/06/2010
Posts:
Payment terms

Dear Kurt

Thank you very much indeed for your prompt reply to my question, I also appreciate your quick and clear initial respond. Eventhoug that was your point of view regarding the FAT and PAT, I really liked it.

Dear, what about if FAT stand for Factory Acceptance Tests, who may deliver this document, and when this will be deliverd. I am informing you again that the equipments require to be installed and checked. Another point sir, the PAT may also mean from my point of view (may be or may be not) Preliminary Acceptance Tests. I think it is an obligation to the vendor to pretest the equipment before FAT. May be this will be the reason why the payment under presenting a PAT comes before the payment under FAT. Dear sir, I am not sure if I am right or not that is why I am looking for in the forum someone to assess me through his/her experience and expertises.

Thank you once again. 

Top
Tue, 09/21/2010 - 05:43
#3
bob_exports
Offline
Joined: 10/11/2009
Posts:
Payment terms

The only correct way to decide what PAT and FAT mean is to go back to the contract of sale where the payment terms should be clearly listed. In my experience PAT will be a Preliminary Acceptance Test and FAT will be a Final Acceptance Test.

Bob

Top