D/P


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D/P

Documents Against Payment

A terms of payment arrangement in which an exporter entrusts the ownership documents of an asset to his/her bank, which then presents them to an importer only after the bank has received payment for the asset. Essentially, the bank holds hostage the ownership documents, which the importer needs to take possession of the merchandise, until the bank, and, by extension, the exporter, are paid. A risk for the exporter is the possibility that the importer will refuse to pay, and, while he/she will not be able to take possession of the merchandise, the exporter has little legal recourse. The terms of this agreement are set between the importer and exporter at the time of the sale.