1.
A DC, subject to UCP 600, available for 30-day deferred payment of
USD200,000, covering furniture items of Reconnaissance design shipped from
Hong Kong to Jeddah, Saudi Arabia was confirmed by the Advising & Nominated
Bank.
An amendment added USD100,000 for framed oil paintings with pornographic themes.
The Confirming Bank advised the amendment without adding confirmation to USD100,000
because pornographic works would be confiscated by the Saudi Arabian import authorities
due to religious reasons.
The Beneficiary argued that
(a) DC deals with documents not with goods
(b) A bank should not speculate the intention of the parties in international trade
(c) since both the Issuing Bank and the Applicant agreed to the amendment, they
were the parties to take this risk, not the Confirming Bank that could claim
reimbursement from the Issuing Bank regardless as whether the goods were
confiscated or not, according to UCP 600 articles 7 (c) and 12 (b).
Does the Confirming Bank have a right to do so under UCP 600?
1. Yes
2. No
2. Bank A has confirmed an L/C issued by Bank B in favour of its customers Nice
Exports. On 01st April Bank A receives an amendment to the letter of credit. If
Bank A does not wish to extend its confirmation to the amendment it should
a) Inform the issuing bank without delay
b) Inform the beneficiary without delay
c) Inform beneficiary and issuing bank without delay
d) Bank A is bound to extend its confirmation to the credit
3. You have received credit compliant documents from a beneficiary under an
unconfirmed sight documentary credit and as a nominated bank you wish to
negotiate them. Which of the following statements describe best your actions?
a) Make immediate payment to the beneficiary
b) Make payment to the beneficiary upon receipt of funds from the issuing bank
c) Send documents to the issuing bank
d) Seek permission from issuing bank to negotiate the documents
a) D only
b) B & C
c) C only
d) A & C
4. LC was to be expired on 15th Aug. The beneficiary presented documents on
14th Aug to a nominated bank. What was latest day of completion of examination
by the nominated bank? (if there are no holidays)
a) 15th Aug
b) 20th Aug
c) 19th Aug
d) 18th Aug
5. If a bank is requested to advise L/c but elects not to advise the same to
beneficiary
a) It must inform to the issuing bank within reasonable time but not exceeding 5
banking days
b) It must inform to the issuing bank without delay
c) It need not inform to the issuing bank
d) It must inform to the issuing bank within a day or two
6. Issuing bank amended L/c for 4 conditions stated in confirmed credit. What is
appropriate statement.
a) Beneficiary must accept amendment covering all four amendments in total
or reject
b) Confirming must add confirmation and forward the same to beneficiary
c) Beneficiary may accept 3 conditions and may reject one condition
d) All above
7. Bank that negotiates without recourse of a complying presentation
a) Issuing bank
b) Confirming bank
c) Advising bank
d) A & C
8. If a credit is available with a nominated bank by acceptance “30days after
sight” does this mean 30days after the nominated bank’s sight of the documents
or the issuing bank’s sight ?
9. A DC subject to UCP 600 specified a reimbursement instruction that reads:
"Upon receipt of full set of documents in conformity with the letter of credit terms
and conditions, we will effect payment as per your instructions".
Compliant presentation was made to the nominated negotiating bank that had
given value to the beneficiary and claimed for reimbursements. The documents
were however lost in transit by the courier company.
The issuing bank refused reimbursement because reimbursement would only be
effective
"upon receipt of documents" as specified in the reimbursement instruction
quoted above.
Is the issuing bank correct in its refusal decision?
10. Which of the following can be combined under a credit available with and
requiring a draft drawn on an issuing bank?
1. Payment.
2. Deferred payment.
3. Acceptance.
4. Negotiation.
a) 1 and 2 only.
b) 1 and 3 only.
c) 2 and 3 only.
d) 3 and 4 only.
11. Reimbursement authorisation must contain
a) Expiry date and latest date of shipment
b) Expiry date and statement by claiming bank that they of honoured or
negotiated complying presentation
c) Not require any statement and must not show expiry date
d) All above
12. L/c does not stipulate rules applicable for bank to bank reimbursements
a) ICC latest rules for Bank to Bank reimbursements will apply
b) Advising bank must seek clarification from the issuing bank
c) Beneficiary must seek amendment from the applicant
d) None of the above
13. As per additional conditions of L/c, “goods must be of Indian origin” and
requires presentation of following documents:
a) Transport Document
b) Quality Certificate
c) Commercial Invoice
d) None of the above
Identify the document that needs to show “goods are of Indian origin”
14. Under additional conditions of a letter of credit packing details are shown as
“goods must be packed in 50kg pp bags” and requires presentation of following
documents
a) Packing list
b) Commercial Invoice
c) Bill of lading
d) All above
Identify the document that needs to show “goods are packed in 50kg pp bags ”
15. LC issued on 1st Dec 2008 and requires presentation of pre-shipment
inspection certificate. Shipment effected on 15th Dec 2008
a) Pre-shipment inspection certificate must be dated on or before 1st of Dec 2008
b) Inspection certificate dated on or before 15th Dec 2008 is acceptable
c) Inspection certificate dated prior to the date of presentation and showing title
as “Pre-shipment inspection certificate” is acceptable
d) Only A is incorrect
16. L/c available by sight payment and documents under a letter of credit
reached the issuing bank on Friday the 2 nd of Jan 2009 (Saturday and Sunday
non banking days for issuing bank). The issuing bank must honour or reject
presentation:
a) on 9th Jan 2009
b) Between 2nd to 8th Jan 2009
c) on 8th Jan 2009
d) Between 2nd to 9th Jan 2009
17. Issuing bank sent notice of refusal within 5 banking days to the presenter
and to the applicant. Within how many days applicant must confirm acceptance
or rejection of discrepancies to the issuing bank
a) Within 5 banking days upon receipt of such notice of refusal
b) Without delay
c) As soon as possible
d) No time limit for applicant’s acceptance
18. Last date for presentation of documents in beneficiary’s country falls on
Sunday which is a local holiday. Since L/c is issued by bank in Dubai and Sunday
is working day for issuing bank, nominated bank refused presentation of
documents on Monday.
a) Nominated bank is right in refusing presentation under UCP rules.
b) Nominated bank should have taken clarification from the issuing bank
c) Nominated bank can not refuse documents under UCP rules
d) None of the above is correct
19. In a DC subject to UCP 600, the issuing bank gave a refusal notice that read:
"We refuse payment due to following discrepancies:
The commercial invoice and the bill of lading are not consistent with each other.
Meanwhile we hold documents at your risk and disposal".
Is this refusal notice valid?
20. A beneficiary made a compliant presentation under a documentary credit
subject to UCP 600. The applicant showed to the issuing bank that the same
beneficiary had made fraudulent presentation under another documentary credit
issued by another bank and instructed the issuing bank not to pay the
beneficiary. The issuing bank did not follow the instruction and paid the
beneficiary. The applicant refused to reimburse the issuing bank.
Is the applicant right in doing so?
21. A DC subject to UCP 600 required presentation of a freight receipt without
specifying its issuer and data content. A freight receipt issued by the beneficiary
was presented, certifying that the freight was received by the carrier.
Is it acceptable?
22. A DC subject to UCP 600 has the following stipulation:
"Purchase Contract No. 123456 dated 24 July 2007 attached herewith forms an integral
part of this documentary credit."
Is this stipulation acceptable?
23. Is the following refusal notice acceptable for a DC subject to UCP 600?
"We refuse the documents and have found the following three discrepancies in the
presented documents:
1. The port of discharge in the B/L is not the same as that stated in the DC.
2. Presentation after expiry.
3. Corrections in the certificate of origin are not authenticated by the issuer."
24. Suppose a nominated bank purchases discrepant documents after receipt of
the issuing bank
An applicant informed the issuing bank that the goods were rubbish and asked the issuing
bank to freeze payment under a DC subject to UCP 600 due to trade frauds although the
documents presented were all compliant.
Should the issuing bank follow the instructions from the applicant?
25. A nominated paying bank sent three refusal notices on the same day under a DC
subject to UCP 600. The first notice was sent by fax listing all the discrepancies with
reasons; the second notice made by telephone advising payment dishonour and the third
notice sent by telex advising that documents were returned to the presenter by local
courier.
Is this acceptable?
