What is a documentary sales transaction?

(a): A documentary sales transaction involves shipment of a document giving the buyer legal title to the goods in the sales contract, with a bill of lading detailing the terms of shipment of the goods. This allows for less risk to both parties, because it lowers the risk of a nonconformity or nonpayment relative to simply shipping the goods. Further, because the buyer owns the goods prior to shipment, it allows the buyer to negotiate for the sale or transfer of the goods while they are in transit.

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