It is the custom of large buyers of foreign commercial bills of exchange to exact of exporters what is termed a "hypothecation certificate." This certificate, after describing the nature of the shipment and the documents in question, states in effect that the bill of lading is lodged as collateral security for the acceptance and payment of the draft; that in case the drawee declines to accept the draft, or it is not paid at maturity, the owner of the bill is authorized to place the property described in the hands of brokers for sale for account of whom it may concern, and apply the proceeds toward payment of the draft and expenses incurred; and that in case of a deficiency the seller agrees to pay amount on demand. Sometimes exporters give a general hypothecation certificate to apply to any and all bills of exchange purchased of them.

Certificates of Insurance, Etc.

Certificates of insurance on shipments exported are usually for a sum of from 10 to 20 per cent. in excess of the stated value of the goods. They should be carefully examined to see that there is no clause which would render insurance void in event of the shipment not going forward at a specified period, or that it would expire before arriving time of the goods in case of delay or by-reason of any of the possible emergencies likely to arise. The buyer of foreign commercial bills of exchange must be familiar with the revenue laws and commercial customs of all the foreign countries, as well as the various rates of discount upon the several classes of paper as they change from day to day.