Nature of Goods

Abstract

The repayment of a structured trade and receivables finance facility relies upon the acceptability of the goods to the end-buyer, their vulnerability to dispute, and the disposal of the goods as a secondary means of repayment in the case of default or order cancellation. The importance of the nature of goods is highlighted and the risk considerations of those which are new to market, perishable, branded, licensed, promotional, and dual-use. The need to assess the marketability, price volatility, and net realisable value of the goods after the costs of disposal is explained. The financier’s requirement for the goods to be insured to compensate for the loss or reduction in value of goods is highlighted and the required terms of cargo insurance are described.