Abstract

Chapters 4 and 5 on foreign exchange settlement risk and cross-border electronic payments raise an interesting issue. Do these transactions involve (i) a delivery against payment, or (ii) a payment against payment? For example, assume that a person purchased apples with dollars instead of a foreign currency. Apples are a commodity and, as such, they get delivered rather than paid. This purchase, therefore, involves a delivery of apples against payment in dollars. However, what if a person buys francs instead of apples? Does he or she have a delivery of francs against payment in dollars or a payment of francs against payment of dollars? The answer is significant because it will lead to the application of one of two different legal regimes.