A contract is an instruction, wherein, a customer (drawer) approaches your bank to purchase, negotiate, discount, or send for collection, a financial instrument called a bill. This written instrument is an instruction instructing the draw of the bill to pay a certain sum of money in favor of your bank or at the order of your bank.

Such instruction involves a sequence of events but is treated as one contract in Oracle Banking Trade Finance.

For example, Ms Keturah Smith (exporter or drawer) in India draws a bill on Mr Silas Reed (importer or drawee) stationed in Paris in which the exporter Keturah Smith instructs Mr Silas Reed to pay the amount quoted on the bill to her bank Midas Bank, India, (exporters bank) or to the order of Midas Bank. Midas Bank after endorsing the bill in favor of Mr Reed’s bank - Berliner Bank (collecting bank) sends the bill for collection. The collecting bank, on receiving the bill and it’s supporting documents, requests Mr Reed to make a payment against the bill. Berliner Bank will then remit the bill amount to Midas Bank (issuing bank), and debit Mr Reed’s account.

The collecting bank releases the documents to Mr Reed, allowing him to claim the merchandise.

The sequence of events involved, to affect the bill can be considered a bill contract. Thus, the specific bills processed for the customers of your bank can be defined as a contract.

You have defined products to group together or categorize bills, which share broad similarities. Under each product that you have defined, enter specific bills, based on the needs of your customers. Each of these will constitute a contract. While products provide a general framework and serve to classify or categorize bills, contracts are customer specific.

By default, a bill inherits all attributes of the product to which it is associated. This means that you will not have to define these general attributes, each time you input a bill involving a product.