Patent ID: 7155409

Claim:
A trade finance method for financing the sale of a traded product supplied by a seller to a buyer physically removed from the seller, the method comprising: a) the buyer providing an event-activated, prerelease latent payment draft to the seller or the seller's agent prior to release of the traded product from the seller's control wherein the event-activated prerelease latent payment draft: i) is drawn by the seller; ii) is payable to the seller's order by a financial institution and is non-negotiable when drawn; iii) is drawn on the buyer at the financial institution and is executed by the buyer to indicate the buyer's acceptance of the payment draft; iv) sets forth a payment draft activating event, the activating event being effective to render the draft negotiable and being selected from the group of events consisting of release of the traded product by the seller, delivery of the traded product to the buyer, availability of specified funds to the buyer, availability of the proceeds of an asset sale to the buyer, in the case of a manufactured traded product, progress of manufacture of the traded product to an agreed stage and of a future date certain and occurrence of the activating event being agreed by the buyer and seller as commencing the payment term; v) sets forth a payment term of specified duration, the payment term commencing with the date of occurrence of the activating event, the date of the activating event being a date occurring after execution of the payment draft by the buyer; and vi) orders a payment of a specified amount of money to be made within the payment term; b) the buyer executing a second payment draft, the second payment draft also satisfying the conditions of the first payment draft set forth in clauses a) i)–vi) hereinbefore, prior to receiving the traded product; and c) the seller releasing the traded product for delivery to the buyer subsequently to receiving the latent payment draft; wherein the first and second payment drafts are mutually extinguishable, each payment draft being designated as being payable if the other payment draft remains unpaid.