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CDCS Exam 2019 Probable Question and Answers

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CDCS Exam 2019 Probable Question and Answers

Chapter 1

The history and use of documentary credits

  1. One of the first forms of letter of credit introduced was known as which one of the following?
  2. A businessman’s letter of credit
  3. An exporter’s letter of credit
  4. A traveler’s letter of credit

D.A seller’s letter of credit

The correct answer is C. One of the first forms of documentary credit was known as the traveler’s letter of credit.

  1. Documentary credits have been in existence for only the past 300 years.’ Is this statement true or false?
  2. True
  3. False

The correct answer is B. Documentary credits have been traced back to Ancient Egypt and Babylon.

  1. What was the second most-used currency in documentary credits issued using the SWIFT MT700 message in 201 3?
  2. The US dollar (USD)
  3. The euro (EUR)
  4. The pound sterling (GBP)
  5. The Chinese renminbi (RMB)

The correct answer is D. In 2013, the Chinese renminbi became the second most-used currency in an MT700 message, alter the US dollar.

  1. What was the average value of a documentary credit issued by MT700 in 201 3?
  2. USD563,000
  3. USD653,000
  4. USD356,000
  5. USD635,000

The correct answer is B. According to the statistics provided by SWIFT for the 2014 ICC Trade Finance Survey, the average value of a documentary credit was USD 653,000

  1. ‘ A documentary credit can be used only for the purchase of consumables, food and clothing, and for the provision of services or performance.’ Is this statement true or false?
  2. True
  3. False

The correct answer is B. A documentary credit can potentially be used for any purpose.

 

Chapter 2

The role of the ICC and the development of the UCP

  1. Which of the following is not an activity performed by the International Chamber of Commerce?
  2. Rule setting
    B. Dispute resolution
    C. Signing of certificates of origin
    D. Policy advocacy

The correct answer is C. The ICC does not become involved in signing documents that are traditionally presented under documentary credits.

  1. How many revisions of the UCP have there been since 1933?
    A. Five
    B. Eight
    C. Six
    C. Seven
    The correct answer is C. The first UCP was issued in 1933, and revisions were made in 1951, 1962, 1974, 1983, 1993 and 2007 (totalling six revisions).
  2. Today, the UCP serves as the basis for what value of trade transactions per year?
    A. USD20 billion
    B. USD2 trillion
    C. USD200 billion
    D. USD20 trillion
    The correct answer is B. The 2014 ICC Trade Finance Survey estimated that documentary credits issued subject to UCP 600 amounted to some USD2 tfl per year.
  3. What is the current publication number of the International Standard Banking Practice for the Examination of Documents (ISBP) under UCP 600?
    A. 645
    B. 681
    C. 745
    D. 781
    The correct answer is C. The most recent revision of the ISBP is provided in ICC Publication No. 745.
  4. The first eUCP set of rules, version 1.0k, was implemented during the lifetime of which revision of the UCP?
    A. 290
    B. 400
    C.500
    D. 600
    The correct answer is C. eUCP version 1 .0 came into effect during the lifetime of UCP 500.

Chapter 3

Documentary credits and other methods of settlement

  1. ‘A bank guarantee can be issued subject to UCP 600.’ Is this statement
    true or false?
  2. True
    B. False

The correct answer is A. Any undertaking that is subject to the presentation of one or more documents can be made subject to UCP 600. This will include a bank guarantee.

  1. ‘The issuance of a bank guarantee offers an applicant little risk, because it covers only the non-payment of an open account or documentary collection transaction.’ Is this statement true or false?
    A. True
    B. False
    The correct answer is B. There is the risk that the beneficiary may draw under the guarantee even if there has been no default under the open account arrangement or documentary collection.
  2. Under a sight documentary collection, for what reason is the buyer exposed to only minimal risk?
  3. Because it need only pay when it has received and reviewed the original shipping documents.
    B. Because it need only pay when it has reviewed the original shipping documents at the counters of the collecting bank.
    C. Because it need only pay when it has reviewed the original shipping documents at the counters of the remitting bank.

The correct answer is B. The buyer agrees to pay once it has seen the documents at the counters of the collecting bank.

  1. Documentary credit
    B. Documentary collection
    C. Open account

The correct answer is A. Only under a documentary credit is there a guarantee of payment on the due date. For an acceptance under open account trading or documentary collection, the buyer (as acceptor) may or
may not effect the settlement on the due date.

  1. ‘In terms of the type, number, and form of documents that will be received, the buyer has the same protection under an open account transaction as it does under a documentary credit.’ Is this statement true or false?
    A.True .
    B. False

The correct answer is B. In an open account transaction, there are no predefined documents that the seller must present to the buyer.

 

 

 

 

Chapter 4

Guide to Documentary credits- Definitions

  1. It is possible for an issuing bank to also be an applicant.’ Is this statement true or false?
  2. True
    B. False .

The correct answer is A. It can be the case that the issuing bank will be the

applicant under a standby letter of credit.

  1. ‘A documentary credit is always advised by the use of the SWIFT MT700.’ Is this statement true or false?
  2. True
    B. False.

The correct answer is B. A documentary credit can be advised by any

method that provides for its authentication — that is, including by letter,

telex, fax or email.

  1. ‘An applicant is a party to a documentary credit.’ Is this statement true or false?
    A. True
    B. False

The correct answer is B. The applicant is not a party to the credit. Any

instruction that it provides after the issuance of the credit, such as a

request for an amendment or a waiver of discrepancies, is subject to the

consent of the issuing bank.

  1. Which of the following is true of a second advising bank?
  2. A second advising bank is utilised by the advising bank to advise a
    credit to the beneficiary.
    B. A second advising bank is named in the credit to advise the credit
    to the beneficiary.
    C. Either of the above.

The correct answer is C. A second advising bank can be named in the

documentary credit or be selected by the advising bank.

  1. Which of the following is not a form of honour’?
  2. Acceptance
    B. Deferred payment
    C. Negotiation
    D. Payment

The correct answer is C. The definition of ‘honour’ is composed of payment,

acceptance and deferred payment.

Chapter 5

The Sales Contract

  1. An exporter sells goods overseas on FOB and CIF Incoterms, respectively.

Who is responsible for the freight charges in each?

  1. FOB — importer / CIF – exporter
  2. FOB – importer / CIF – importer
  3. FOB – exporter / CIF – importer
  4. FOB – exporter / CIF – exporter

 

The correct answer is A. Under FOB terms, the importer is responsible for the freight charges, and under CIF, the exporter.

 

  1. Under FOB terms and UCP 600, a bill of lading would be required to state which of the following?

 

  1. Shipped on board and freight paid
  2. Received for shipment and freight paid
  3. Shipped on board and freight payable at destination
  4. Received for shipment and freight payable at destination

 

The correct answer is C. UCP 600, article 23, requires the bill of lading to indicate that the goods have been shipped on board. Use of the FOB Incoterm means that freight is payable at destination.

 

  1. What is the meaning of Incoterm CIF?

 

  1. Carriage, insurance and freight
  2. Cost, insurance and freight
  3. Cost including freight
  4. Charges, insurance and freight

 

The correct answer is B. CIF stands for ‘cost, insurance and freight’.

 

  1. On whom does Incoterm EXW impose the least obligation?
  2. The buyer
  3. The seller

 

The correct answer ¡s B. The seller delivers by making the goods available to the buyer at its own location, loaded or unloaded on the departing conveyance.

 

  1. Which of the following is true of the use of trade terms such as Incoterms 2010?

 

  1. They determine the port or place at which title to the goods passes from seller to buyer.
  2. They determine the port or place at which delivery of the goods is determined to have been

made by the seller.

  1. They determine the port or place at which the goods are to clear customs.
  2. They determine the port or place at which the buyer is expected to make payment.

The correct answer is B. Incoterms determine the point at which delivery occurs, and as a result the point at which costs and risk pass between the seller and buyer.

 

 

 

Chapter 6

Pre-issuance considerations and requirements

 

  1. Of what is an ongoing review of a client’s business profile’ a definition?

 

  1. Know your customer (KYC) principles
  2. Customer due diligence (CDD) principles
  3. Anti-money laundering (AMI) principles
  4. Anti-terrorist-financing (ATF) principles

 

The correct answer is B. COD is recognized as the process for the ongoing review of a customer’s business profile.

 

  1. Which of the following are potential risks faced by an applicant?

 

  1. Loss or damage to goods in transit
  2. Foreign exchange risk

iii. Failure of the issuing bank

  1. Fraud in the presented documents

 

  1. i, ii and iii
  2. ii, iii and iv
  3. I, ii, iii and iv
  4. I, iii and iv

 

The correct answer ¡s C. All of them are risks that an applicant can face.

 

  1. Which of the following is not a component usually seen ¡n a credit facility agreement or document?

 

  1. Security requirements for the establishment of the facility
  2. Representations and warranties
  3. Types of document that can be called for
  4. Fees and expenses

 

The correct answer is C. A credit facility agreement or document will not specify the documents that are expected to be called for other, than indicating whether the bank may wish to be shown as the consignee or order party, in order to control the goods on arrival.

 

  1. When an applicant requests the presentation of a document such as an inspection or analysis certificate, what type of conditions should be expressed ¡n the application form?

 

  1. Name or type of issuer
  2. The data content
  3. The standard or quality to which the goods are to be inspected or analyzed
  4. All of the above

 

The correct answer is D. All three conditions should be covered in an application form, not only for an inspection or analysis type of document, but any document.

 

  1. Which of the following is a way of describing what is meant by the ‘autonomy’ of the documentary credit?

 

  1. A documentary credit ¡s separate from the sale contract on which it is based.
  2. A documentary credit ¡s supplemented by the sale contract on which it is based.
  3. A documentary credit is supported by the sale contract on which it is based.
  4. A documentary credit is superseded by the sale contract on which it is based.

 

The correct answer is A. This is essentially the wording that appears in UCP 600, sub-article «a).

 

 

Chapter 7

Issuing a Documentary credit

 

 

  1. When a documentary credit is available with the issuing bank, which type of settlement is not appropriate?

 

  1. Payment
  2. Deferred payment
  3. Acceptance
  4. Negotiation

 

The correct answer is D. A credit may be available with an issuing bank only by payment, acceptance or deferred payment.

 

  1. For a documentary credit that is available with a nominated bank by sight payment, which of the following reimbursement conditions would not be appropriate?

 

  1. ‘Please debit our account held with you.’
  2. We will remit proceeds in accordance with your instructions upon receipt of complying documents.’
  3. ‘Please claim reimbursement from ZZZ Bank, New York.’
  4. ‘We will remit proceeds in accordance with your instructions upon receipt of a SWIFT message confirming that you have received a complying presentation.’

 

The correct answer is B. A credit that is available by payment must allow the nominated bank to obtain reimbursement by debiting the account of the issuing bank, or claiming reimbursement from a reimbursing bank, or by the issuing bank honouring a claim sent by SWIFT.

 

  1. ‘There must always be a gap of 21 calendar days between the latest shipment date and the expiry date.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. The reference to 21 calendar days, in UCP 600, sub-article 14(c), is a default rule when the credit is silent with regard to a presentation period. The period can be whatever is agreed between the applicant and the beneficiary. The latest shipment date and expiry date could be the same.

 

  1. For which of the following settlement types must a draft be required for presentation?

 

  1. Payment .
  2. Deferred payment
  3. Acceptance
  4. Negotiation

 

The correct answer is C. Only a credit available by acceptance requires that a draft be presented (drawn on the bank that is to accept it).

 

  1. A credit facility will usually cover which of the following?

 

  1. The maximum amount that may be outstanding
  2. The period for which the facility will be available

iii. Whether partial shipments or drawings may be allowed

  1. The maximum usance period for any documentary credit
  2. I and iv
  3. I, iii and iv
  4. ii, iii and iv
  5. i, ii and iv
  6. All of them

 

The correct answer is D. A credit facility will not dictate whether or not partial shipments or drawings are to be allowed. This is left to the applicant and beneficiary to agree.


 

 

Chapter 8

Amendment from an issuing bank perspective

 

  1. An amendment is subject to the consent of whom?

 

  1. The beneficiary
  2. The issuing bank and the beneficiary
  3. The issuing bank, the beneficiary and any confirming bank
  4. The issuing bank, the beneficiary and any nominated bank

 

The correct answer is C. An amendment is subject to the consent of the issuing bank (to issue it in the first place), a confirming bank, if any, and the beneficiary.

 

  1. Which of the following is true of an amendment issued stating that it will be deemed to have been accepted by the beneficiary unless it rejects the amendment within seven calendar days of its date?

 

  1. The inclusion of this condition is an acceptable practice and is a way of determining whether the beneficiary has accepted or rejected an amendment.

 

  1. The inclusion of this condition is not acceptable and is not one of the ways of determining whether the beneficiary has accepted or rejected an amendment.

 

  1. The inclusion of this condition is an acceptable practice if inserted by the advising bank in its advice of the amendment and is a way of determining whether the beneficiary has accepted or rejected an

amendment.

 

  1. The inclusion of this condition is an acceptable practice if inserted by the confirming bank in its advice of the amendment and is a way of determining whether the beneficiary has accepted or rejected an

amendment.

 

The correct answer is B. Amendments must not include a condition relating to a timeline in which the beneficiary is to accept or reject an amendment (UCP 600, sub-article 1 0(1)). If one is included, it will be disregarded.

 

3 When is an issuing bank irrevocably bound by an amendment?

 

  1. When it approves the request of the applicant
  2. When it issues the amendment
  3. When the advising bank or confirming bank advises the amendment
  4. When the beneficiary receives the amendment

 

The correct answer is B. An issuing bank is bound as of the time at which it issues the amendment (UCP 600, sub-article 10(b)).

 


 

 

  1. An amendment decreases the value of a documentary credit. When should the credit facility amount be reduced accordingly?

 

  1. When the amendment is issued
  2. When the advising bank or confirming bank advises the beneficiary of the amendment
  3. When the beneficiary provides its consent to the amendment by way of a notification of acceptance
  4. When the beneficiary provides its consent to the amendment by way of a notification of acceptance or the presentation of documents that comply with the original documentary credit and the amendment

 

The correct answer ¡s D. The credit facility amount should not be reduced until such time as the beneficiary has consented to the amendment, according to UCP 600, sub-article 10(c).

 

  1. ‘If a second advising bank decides not to advise an amendment to the beneficiary, it must inform the issuing bank without delay.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. A second advising bank should inform the advising bank of its decision. The advising bank will inform the issuing bank.

 

 

Chapter 9

Advising a documentary credit

 

  1. When an advising or second advising bank issues its advice of a documentary credit, it signifies that it has found the documentary credit or its advice to be which of the following?

 

  1. Genuine
  2. Authentic
  3. Apparently genuine
  4. Apparently authentic

 

The correct answer is D. An advising bank or second advising bank is ¡n a position to determine only whether a documentary credit (or the advice of the advising bank) is apparently authentic (UCP 600, sub-articles 9(b) and (c)).

 

  1. ‘An advising bank receives a documentary credit by way of a telex instruction. The bank is unable to agree the testing algorithm that has been used. The bank must obtain a corrected authentication before it advises the documentary credit to the beneficiary.’ Under UCP 600, is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. UCP 600, sub-article 9(f), permits an advising bank to advise a documentary credit that it has been unable to apparently authenticate, provided that it informs the beneficiary or second advising bank of this fact.

 

  1. ‘A second advising bank is required to determine the apparent authenticity of the documentary credit issued by the issuing bank.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. A second advising bank is required to determine the apparent authenticity of the advice that it receives from the advising bank.

 

  1. ‘An advising bank or second advising bank is not required to examine a documentary credit to determine whether it is in a workable form.’ Is this statement true or false?

 

A.True .

  1. False

 

The correct answer is A. There is no rule in UCP 600 that requires either bank to review the documentary credit to ensure that it appears to be in a workable form.

 

  1. ‘Because a documentary credit that is to be advised to a beneficiary conveys no engagement or responsibility of an advising or second advising bank, its contents need not be examined against bank policy.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. Banks should always review a documentary credit from the perspective that it does not breach any bank policy.

 

 

 

Chapter 10

Confirming a documentary credit

 

  1. ‘A bank receives a documentary credit in which it is requested to add its confirmation. When reviewing its terms and conditions, the bank is not in agreement with one or more conditions. It decides not to add its confirmation and informs the issuing bank the next day. The bank is not required to advise the documentary credit on an unconfirmed basis.’ Is this statement true or false?

 

  1. True
  2. False .

 

The correct answer is A. UCP 600, sub-article 8(d), states that the bank may advise the credit without confirmation. There is no obligation to advise it.

 

  1. According to UCP 600, article 8, a confirming bank is irrevocably bound to honour or negotiate from when?

 

  1. When the beneficiary receives the documentary credit
  2. When the beneficiary presents complying documents under the credit
  3. When ¡tissues its advice of confirmation
  4. When it determines that the transaction falls within the credit facility of the issuing bank

 

The correct answer is C. A confirming bank is irrevocably bound as of the time at which it adds its confirmation to the credit (UCP 600, sub-article 8(b)).

 

  1. ‘An authorization of the issuing bank, for a bank to add its confirmation, is indicated in Field 49 of a SWIFT MT700 message by the word “Confirm”.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. An authorization to add confirmation would be indicated by the use of ‘MAY ADD’ in Field 49.

 

  1. ‘The beneficiary presents documents to the confirming bank, which are found to be compliant. The documentary credit is available by sight payment. The confirming bank is authorized to claim reimbursement from a named reimbursing bank value three banking days after sending its claim to that bank. The confirming bank claims reimbursement value 20 May 2OXX (Monday). Because of the time-zone differences between it and the reimbursing bank, the confirming bank will not receive confirmation that funds have been credited to its account until the morning of 21 May. The confirming bank should effect payment to the beneficiary on 21 May, when confirmation of receipt of funds is received.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. Payment is due on 20 May 2OXX and the confirming bank should pay the beneficiary with that value date.

 

 

  1. Which of the following criteria will a bank not usually review when determining whether a documentary credit falls within the structure of a credit facility granted to the issuing bank?

 

  1. The expiry date
  2. The payment terms
  3. The presentation period
  4. The amount

 

The correct answer is C. A presentation period has no impact on a credit facility.

 

 

Chapter 11

Advising amendments to a beneficiary

 

  1. A confirming bank is irrevocably bound by an amendment at what time?
  2. When it approves the request of the issuing bank
  3. When it advises the amendment
  4. When the beneficiary provides its consent
  5. When the beneficiary receives the amendment

 

The correct answer is B. UCP 600, sub-article 10(b), states that a confirming bank will be irrevocably bound as of the time at which it advises the amendment.

 

  1. Which of the following is true if a confirming bank decides not to add its confirmation to an amendment?

 

  1. It must advise the amendment to the beneficiary without its confirmation.
  2. It must nevertheless advise the amendment to the beneficiary with its confirmation, as it confirmed the documentary credit.
  3. It may advise the amendment without its confirmation.
  4. It may contact the issuing bank and advise that its confirmation no longer applies to the documentary credit.

 

The correct answer is C. UCP 600, sub-article 1 0(b), states that a confirming bank may extend its confirmation to an amendment. In circumstances under which it decides not to extend its confirmation, a confirming bank must inform the issuing bank without delay and may choose to advise the amendment without confirmation. The advice to the beneficiary should clearly indicate that confirmation has not been extended to the amendment.

 

  1. ‘An amendment contains three changes to the terms and conditions of the documentary credit. The beneficiary may accept any combination of those changes and any unaccepted changes will be considered as disregarded and the issuing bank will be bound only by the accepted amendment(s).’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. UCP 600, sub-article 1 0(e), states that partial acceptance of an amendment is not allowed and will be deemed to be notification of rejection of the amendment (as a whole).

 

  1. ‘A documentary credit indicates that the draft accepted by the nominated bank is to be discounted and that the discount charges are for account of the applicant. An amendment is issued stating that these charges are now for account of the beneficiary. The beneficiary has not provided a notification of acceptance or rejection prior to its presentation of documents. The covering letter of the beneficiary is silent with regard to the amendment. At that point in time, the amendment should not be considered to have been accepted.’ Is this statement true or false?

 

 

 

  1. True
  2. False

 

The correct answer is A. There has been no prior notification of acceptance of the amendment and neither does the presentation provide any indication of acceptance. The bank should contact the beneficiary to ascertain the position.

 

  1. ‘When an advising bank advises an amendment to a beneficiary without any comment, it is to be considered that the amendment is genuine.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. The advising of an amendment’ signifies that the advising bank has satisfied itself as to the apparent authentication of the amendment that has been received from the issuing bank. It is not conveying that the amendment s genuine UCP 600 sub article 9(b) applies

 

 

 

 

Chapter 12

Document Characteristics and preparing documents

 

 

  1. Which of the following transport documents is not appropriate for any transport by sea?

 

  1. A multimodal transport document
  2. A bill of lading .
  3. A charter party bill of lading
  4. A CMR note

 

The correct answer is D. A CMR note is a transport document covering dispatch by road.

 

  1. Which of the following documents can convey title to the goods?
  2. A non-negotiable sea waybill
  3. Air transport documents
  4. A bill of lading
  5. ACMR note

 

The correct answer is C. A bill of lading is capable of conveying title to the goods.

 

  1. If a nominated bank is closed on the expiry date of a documentary credit and the beneficiary is ready to present its documents, what action must the beneficiary take to prevent the expiration of the credit?

 

  1. It must present the documents on the last day on which the bank is open before the expiry date.
  2. It must seek an amendment to the documentary credit, with a new expiry date.
  3. It must present the documents on the first day on which the bank is open after the expiry date.
  4. t must notify the applicant it cannot present in time.

 

The correct answer is C. ¡f the bank is expected to be closed — that is, because it falls on a weekend, a national holiday, etc on the expiry date. it will extend to the next banking day, according to UCP 600, sub-article 2 9(a).

 

  1. What is the type of bill of lading that is not acceptable under UCP 600 unless it is specifically required or permitted by the documentary credit?

 

  1. A liner bill of lading
  2. A through bill of lading
  3. A marine bill of lading
  4. A charter party bill of lading

 

The correct answer is D. A charter party bill of lading must be specifically required or permitted by the terms of the documentary credit (ISBP 745, paragraph GI).

 

  1. ‘A documentary credit is issued with the following requirement: “Full set clean on board bills of lading issued to order of the issuing bank, marked notify the issuing bank and freight prepaid.” The presented bills of lading comply fully with this requirement, but also indicate a further notify party: the applicant. The applicant name is that which is stated in the documentary credit, but with a different address. The document is complying, because additional notify parties are acceptable and because the documentary credit did not require the applicant to appear as notify party, so that any address may be shown.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. UCP 600, sub-article 14(j), states that when the address and contact details of the applicant appear as part of the consignee or notify party details on a transport document subject to articles 19—25, they must be as stated in the credit. UCP 600, sub-article I 4(j), draws no distinction between a documentary credit that requires the applicant details to appear as notify party and one that does not.

 

 

Chapter 13

Examining documents

 

  1. A confirming bank receives documents two days prior to the expiry date. The examination process concludes one day after the expiry date. The confirming bank has refused the presentation because of a conflict of data between the packing list and the invoice. The beneficiary argues that the confirming bank should have examined the documents within the expiry date so that any discrepancies could be corrected (where possible) in advance and so holds the confirming bank liable for failing to examine the documents in a manner. The confirming bank argues that it had no obligation to accelerate the examination process. Which of the two is right?

 

  1. The beneficiary
  2. The confirming bank

 

The correct answer is B. UCP600, sub-article 14 (b), states that the maximum examination period of five banking days following the day of presentation is not curtailed or otherwise affected by the occurrence on or after the date of presentation of any expiry date or last day for presentation.

 

  1. A documentary credit indicates that documents must be presented within 1 5 days after the date of shipment, but also indicates ‘stale documents are acceptable’. Which of the following statements is true when examining the documents?

 

  1. The reference to presentation within 1 5 days after the date of shipment overrides the reference to stale documents being acceptable.

 

  1. The reference to presentation within is days after the date of shipment is overridden by the reference to stale documents being acceptable.

 

The correct answer is B. ISBP 745, paragraph A 19(b), states that ‘stale documents’ means that documents may be presented later than 21 days after the date of shipment, but in any event no later than the expiry date, and this position will apply even if the credit additionally states a presentation period.

 

  1. ‘A credit indicates in Field 44E (“Port of loading I Airport of departure”) “Lisbon, Barcelona, Marseille”. Field 43P (“Partial shipments”) states “Allowed”. The requirement is for the beneficiary to effect a shipment from each of the named ports.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. The use of commas allows for any one port or any combination to be used (ISBP 745, paragraph A2 (b)).

 

  1. A documentary credit requires a certificate issued by the beneficiary stating that it has sent a copy of the invoice to the applicant at least days before the date of shipment. The date of shipment was Thursday 24 july. When was the copy invoice to be sent?

 

  1. between 22 and 24 july
  2. Between 20 and 22 july
  3. Any time before 22 july

 

The correct answer is C. ISBP 745, paragraph A 14(a)(ii), states that such wording means that an act or event is to take place not later than two days before that date of event. There is no limit as to how early it may take place.

 

  1. ‘The documentary credit requires the presentation of a certificate of analysis issued by a named laboratory. The named laboratory issues the certificate and states at the bottom ‘This document has been produced by electronic means and requires no signature”. The document is acceptable in this form.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. A document that is printed requires a signature. ISBP 745, paragraph A35(c), states that such wording does not in itself represent an electronic method of authentication in accordance with the signature requirements of UCP 600, article 3.

 

 

 

Chapter 14

Examining Transportndocuments

 

  1. ‘A multimodal transport document is a document that covers the shipment of goods on more than one mode of transport. For the purpose of examining the multimodal transport document, there is no need for there to be an indication of the modes of transport that have

been utilized.’ Is this statement true or false?

 

  1. True
  2. False .

 

The correct answer is A. ISBP 745, paragraph D1 (b)(i), states that a multimodal transport document may be silent regarding some or all of the modes of transport utilized.

 

  1. ‘A documentary credit requires shipment to be effected from Antwerp to New York with the presentation of a bill of lading. The presented bill of lading indicates as follows.

 

Pre<carriage: Blank

Place of receipt: Brussels

Ocean vessel: European Star

Port of loading: Antwerp . .

Port of discharge: New York

Place of delivery: Blank .

 

‘It also indicates “shipped on board 30 March 2OXX”.

 

‘Because there is an indication of a place of receipt that is different from the port of -loading, the document should be refused, because the on board notation should also include the name of the vessel and the port of loading.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. The dated on board notation on the bill of lading will require the addition of the name of the vessel and the port of loading only if the pre-carriage field was completed or there was evidence of a means of pre-carriage shown elsewhere on the bill of lading:

 

  1. ‘An air transport document is presented and it has been issued by British Airways. It is signed “For British Airways. Nowhere on the document does it specifically refer to the name of the carrier. Even though British Airways is a global carrier of goods, the document should be refused for the absence of an indication that British Airways is the carrier.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is A. The requirement under UCP 600, sub-article 23(a) (i), is that an air transport document must indicate the name of the carrier. UCP 600 does not make any allowance for issuers that are known to be carriers.

 

  1. ‘A bill of lading is presented and it is signed “John Smith Ltd as agent of the master. The bill of lading need not indicate the name of the master.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is A. ISBP 745, paragraph E5 (d), states that the name of the master (captain) need not be stated.

 

  1. A credit requires the presentation of ‘3 / 3’ (that is, three of three) original multimodal transport documents. The presented document indicates that four originals have been issued. The beneficiary has presented three originals. The nominated bank has refused the documents for the absence of one original multimodal transport document. The beneficiary is arguing that the credit required only three originals to be presented. Whose position is right?

 

  1. The beneficiary
  2. The nominated bank

 

The correct answer is B. UCP 600, sub-article 20(a) (iv), requires that the bill of lading be the sole original, or if issued in more than one original, be the full set as indicated on the bill of lading.

 

 

 

Chapter 15

Examining Insurance, financial, commercial and official documents

 

  1. ‘A documentary credit requires an insurance policy indicating coverage for Institute Cargo Clauses (A), War and Strikes risks. The document is presented and covers the required risks, but evidences exclusions to certain aspects of the Institute Clauses that apply to those risks. The document is discrepant.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. UCP 600, sub-article 28(i), states that an insurance document may contain reference to any exclusion clause.

 

  1. ‘A bill of lading indicates an on board date of 25 July. The presented insurance document is dated 26 july and includes within the body of the document Shipment effected on vessel Ocean Cruise on 25 July”. The document is discrepant.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is A. The insurance document is required to indicate that the insurance was effective no later than the date of shipment (25 July), as required by UCP 600, sub-article 28(e). An indication of shipment details will be seen purely as being for information and not providing an effective date of insurance.

 

  1. ‘A certificate of origin and an invoice must be dated.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. There is no requirement for either to be dated (ISBP 745, paragraph C10: ‘An invoice need not be signed or dated’). The basic requirement of a certificate of origin, as referred to in ISBP 745, paragraph Li, incorporates only that it be signed, certify the origin of the goods and

appear to relate to the invoiced goods. .

 

 

  1. Documents are presented to the issuing bank with a draft drawn on them at 90 days’ sight. The documents are received on 1 5 October (Wednesday). The issuing bank examines the documents on 1 7 October, determines that they do not comply, and issues a notice of refusal. On 20 October, the issuing bank contacts the applicant for a waiver of the discrepancies. The applicant provides its waiver on 21 October, and the issuing banks accepts it the same day.

 

What is the latest due date that the issuing bank must give the nominated bank?

 

  1. 13 january
  2. 15 january
  3. 19 January

 

The correct answer is C. ISBP 745, paragraph B5 (b)(ii), indicates that the latest date for commencement of the period will be 90 days after the date on which the issuing bank accepts the waiver of the applicant.

 

  1. To which of the following could the + / -5 per cent tolerance referred to ¡n UCP 600, sub-article 30(b), be applied?

 

  1. 500 laptop computers
  2. 500 boxes of paper
  3. 500MT sugar
  4. 500 cars

 

The correct answer is C. The items mentioned under A, B and D fall under the category of packing units or individual items, to which UCP 600, sub-article 30(b), states that the + / – 5 per cent tolerance will not apply.

 

 

Chapter 16

The role of the nominated bank

 

  1. ‘A documentary credit is available by deferred payment with Bank X (the nominated bank). Because Bank X has been nominated in the credit, it must incur a deferred payment undertaking if the beneficiary makes a complying presentation.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. A nominated bank that has hot added its confirmation has no obligation to honour or negotiate, except when it has expressly agreed with the beneficiary to do so (UCP 600, sub-article 12(a)).

 

  1. ‘A nominated bank has received a set of documents that it has determined to be discrepant. ft has issued a refusal notice, but it is sent on the sixth banking day following the day of presentation of the documents. Despite this late sending of the refusal notice, the nominated bank is not precluded from claiming that the documents are discrepant and is under no obligation to honour or negotiate.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is A. Preclusion, as mentioned ¡n UCP 600, sub-article 16(f), applies only to a bank that has given an undertaking to the beneficiary – that is, an issuing bank or confirming bank.

 

  1. When a documentary credit is available with any bank and multiple presentations are envisaged, to whom is the beneficiary to present each set of documents?

 

  1. The bank to which the first presentation was made
  2. Any bank willing to handle the presentation

 

The correct answer ¡s B. The beneficiary is not compelled to present documents to the same bank to which it has previously made a presentation. It may present to any bank within the confines expressed in the credit – that is, Field 31 D expressing a place or country for expiry.

 

  1. A credit is available with a nominated bank by deferred payment. Upon presentation of complying documents, it decides not to issue its deferred payment undertaking. Following receipt of the issuing bank’s advice of acceptance of the documents, the beneficiary requests the nominated bank to prepay (discount) the proceeds. Which of the following is true in this event?

 

  1. The nominated bank may agree to do so, because the issuing bank has provided its advice of acceptance.
  2. The nominated bank may agree to do so, provided that it issues its own deferred payment undertaking.

 

The correct answer is B. UCP 600, sub-article 1 2(b), indicates that an issuing bank authorizes a nominated bank to prepay a deferred payment undertaking provided that the nominated bank has issued it.

 

  1. Under a usance negotiation credit, when may a nominated bank act on its nomination?

 

  1. Only at the time of determining that the documents comply
  2. Only on the maturity date
  3. At any time between determining that the documents comply and the date on which payment is

due to the beneficiary and reimbursement is expected from the issuing bank

  1. At the time when the issuing bank provides the nominated bank with its advice of acceptance of

the documents

 

The correct answer is C. The act of negotiation may occur at any time between determining a complying presentation and the day on which the nominated bank expects to receive reimbursement from the issuing bank.

 

 

 

Chapter 17

Honour or negotiation

 

  1. ‘A documentary credit expires in the country of the beneficiary and the advising bank. The advising bank is named as the nominated bank, and the amount of the documentary credit is available to the beneficiary against presentation of drafts drawn on the issuing bank at 30 days after shipment accompanied by specified documents in Field 46A.’ of what type of availability is this a description?

 

  1. Acceptance
  2. Deferred payment
  3. Negotiation
  4. Payment

 

The correct answer is C. The credit is available with a nominated bank with a draft drawn on the issuing bank. If it agrees to act on its nomination, the nominated bank will negotiate.

 

  1. A customer of your bank, who is the beneficiary of a documentary credit available by negotiation and confirmed by your bank, presents a set of documents to you. The payment is due 90 days after the date of shipment. The beneficiary asks you to advance funds to it. If the documents meet the requirements of the documentary credit, what is this type of negotiation?

 

  1. Negotiation under reserve
  2. Negotiation at sight
  3. Negotiation with recourse
  4. Negotiation without recourse

 

The correct answer is D. Because the credit has been confirmed, any negotiation is effected without recourse (UCP 600, sub-article 8(a)(ii)).

 

  1. When a documentary credit is made available with a nominated bank by payment, which of the following reimbursement instructions is not appropriate?

 

  1. Debit the account of the issuing bank held with the nominated bank.
  2. Claim reimbursement from a named reimbursing bank.
  3. Issuing bank to reimburse the nominated hank on receipt of documents by the issuing bank.
  4. Issuing bank to reimburse the nominated bank upon receipt of a SWIFT message indicating the presentation of complying documents to the nominated bank.

 

The correct answer is C. If a documentary credit is available with a nominated bank by payment, the reimbursement instruction must be either options A, B or D. Option C is applicable to a credit available by sight negotiation.

 

  1. ‘A documentary credit is available with a nominated bank by acceptance of a draft drawn at 90 days after the date of shipment. The documentary credit has not been confirmed. The beneficiary -presents complying documents to the nominated bank, and requests the nominated bank to accept the draft and to advance the funds to it less the charges and interest costs of the nominated bank. The nominated bank agrees. On the due date, the issuing bank is not in a position to reimburse the nominated bank because of its insolvency. The nominated bank, which had not confirmed the credit, has the right to seek recourse from the beneficiary. ’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. Because the nominated bank has accepted a draft drawn on it, this constitutes an undertaking to pay on the due date. This undertaking is without recourse to the beneficiary.

 

  1. A documentary credit is available with a nominated bank by deferred payment. The credit is not confirmed. The beneficiary presents documents to the nominated bank that are found to be in compliance with the terms and conditions of the credit. The beneficiary requests that the nominated bank issue its deferred payment undertaking and then provide a prepayment thereof. The nominated bank declines and states that it is not willing to take the documentary risk. The documents are

sent to the issuing bank for honour. The issuing bank sends an advice to the nominated bank, indicating that the documents have been taken up and that, on the due date, the issuing bank will effect settlement to the nominated bank. The beneficiary now requests the nominated bank to provide an advance based on the advice of the issuing bank. Which of the following is true?

 

  1. The nominated bank may go ahead and provide an advance based on the advice of acceptance received from the issuing bank.
  2. The nominated bank may go ahead and provide an advance on the basis that both it and the issuing bank find the documents to be compliant.
  3. The nominated bank may go ahead and provide an advance, provided that it issues its own deferred payment undertaking.

 

The correct answer is C. A nominated bank may act on its nomination after receipt of an advice from the issuing bank that documents have been taken up. Because the credit is available by deferred payment, UCP 600, sub-article 12(b), authorizes the nominated bank to prepay, but only on the proviso that it incurs its deferred payment undertaking.

 

 

 

Chapter 18

Refusing documents

 

  1. ‘An issuing bank refuses documents and decides to approach the applicant for a waiver. The request is sent on a Tuesday afternoon. On Wednesday morning, the applicant replies, giving its waiver. The issuing bank is bound to accept the waiver of the applicant.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. Irrespective of the time that transpires between requesting a waiver and the issuing bank receiving it from the applicant, an issuing bank is under no obligation to accept it.

 

  1. A nominated bank receives documents on Monday 1 5 July. There ¡s a heavy workload at the time because of the holiday period and the examination process is concluded late on Monday 22Ju1y. Discrepancies have been found and a refusal notice is sent in the morning of 23 July. The beneficiary states that the nominated bank is precluded under UCP 600, sub-article 1 6(f), from claiming that the documents are discrepant, and that it must honour or negotiate. The nominated bank disagrees.

With which do you agree?

 

  1. The nominated bank
  2. The beneficiary

 

The correct answer is A. Preclusion, as outlined in UCP 600, sub-article 16(f), applies only to the banks that have given an undertaking to the beneficiary — that is, the issuing bank and a confirming bank.

 

  1. ‘When an issuing bank finds discrepancies in documents, it must always contact the applicant for a waiver.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. UCP 600, sub-article 16(b), states that when an issuing bank determines that a presentation does not comply, it may in its sole judgement approach the applicant for a waiver of the discrepancies.

 

An issuing bank may, at the time of determining that the presentation is  discrepant, decide that it will not accept any waiver of the applicant. In these circumstances, no contact with the applicant will be made.

 

  1. A confirming bank issued a notice of refusal to the beneficiary on 15 july. The status indicated is that the bank is ‘holding documents pending your further instructions’. By 30 july, the confirming bank has not received any response from the beneficiary despite sending two further reminders. Which of the following is true of this situation?

 

  1. The confirming bank must retain the documents until such time as the beneficiary provides instructions.
  2. The confirming bank may return the documents to the beneficiary, in the absence of any instructions.
  3. The confirming bank may forward the documents to the issuing bank for settlement without contacting the beneficiary further.

 

The correct answer is B. UCP 600, sub-article 1 6(e), allows a bank that has indicated such a status to the presenter to return the documents at any time thereafter. This will usually happen when, despite numerous requests, the presenter provides no instructions for the further handling of the documents, or when the applicant decides that it will not provide a waiver.

 

  1. ‘A nominated bank receives documents from the beneficiary and identifies two discrepancies. These discrepancies are advised to the issuing bank, with a request that the bank seek a waiver from the applicant so that the nominated bank may negotiate. An acceptable waiver is received and the issuing bank informs the nominated bank accordingly. The nominated bank negotiates the documents. When the issuing bank receives the documents, it identifies a further discrepancy in addition to the two discrepancies identified by the nominated bank. Since the issuing bank has obtained the waiver of the applicant, it must honour and reimburse the nominated bank.’ Is this statement true or false?

 

  1. True
  2. False

 

The correct answer is B. The waiver obtained by the issuing bank related only to the discrepancies identified by the nominated bank. ¡f the issuing bank identifies further discrepancies, then it is entitled to refuse the documents for those reasons.

 

 

 

Chapter 19

 

Transferable Credits, back-to-back credits and assignment of proceeds

 

  1. If a documentary credit that is available with any bank indicates that it is transferable, which of the following s true?

 

  1. Only the issuing bank may effect a transfer.
  2. Any bank may effect a transfer.
  3. No bank may effect a transfer pending the issuing bank nominating a transferring bank.
  4. Only the advising bank may effect a transfer.

 

The correct answer is C. When a documentary credit is available with any bank, it must indicate the bank that is authorized to effect transfer; This is detailed in UCP 600, sub-article 38(b).

 

  1. The beneficiary has advised an assignment of proceeds to your bank. It has instructed you to pay 80 per cent of the value of each invoice to a named assignee. Which of the following statements is true in this situation?

 

  1. This allows the assignee to present documents under the documentary credit.
  2. This does not allow the assignee to present documents under the documentary credit.
  3. This allows the assignee or beneficiary ta present documents under the documentary credit.

 

The correct answer is B. As explained in UCP 600, article 39, an assignment of proceeds relates only to the right of the beneficiary to assign all or part of the proceeds that are due to it to another entity. It does not provide a right to an assignee to perform under the documentary credit.

 

  1. A transferable credit has been confirmed. The beneficiary has provided its request for transfer. Which of the following is now true?

 

  1. The transferred credit must be confirmed.
  2. The transferred credit must not be confirmed without specific instructions from the first beneficiary. .
  3. The transferred credit must not be confirmed without specific instructions from the issuing bank.
  4. The transferred credit need not be confirmed.

 

The correct answer is A. UCP 600, sub-article 38 (g), which outlines the terms and conditions that may be reduced or curtailed in a transfer, indicates that the transferred credit must accurately reflect the terms and conditions of the (transferable) credit, including confirmation, if any.

 

  1. A transferable credit has been confirmed by Bank A. The beneficiary has submitted its request for transfer to Bank A, which has declined to effect a transfer. The beneficiary insists that, as a transferring bank that has added its confirmation, the confirming bank must agree to its request.

 

The confirming bank insists that it will not transfer the credit. Is the confirming bank permitted to take this position?

 

  1. Yes
  2. No

The correct answer is A. UCP 600, sub-article 38(a), states that no bank is under any obligation to transfer a credit except to the extent and manner to which it expressly consents to do so.

 

  1. Which of the following is true of a transferred credit? The expiry date, latest shipment date and / or period for presentation that appear in a transferable credit may:

 

  1. be increased.
  2. be reduced.

iii. remain the same.

  1. ¡
  2. ii
  3. ii and iii
  4. i, ii and iii

 

The correct answer is C. UCP 600, sub-article 38 (g), indicates the terms and conditions that may be reduced or curtailed. These terms and conditions may remain the same but cannot be increased.

 

 

 

 

Chapter 20

 

The features of documentary credits

 

  1. A documentary credit is issued as follows:

Field 45A: ‘500 Cars (200Type A, 15G Type B and 150 Type C)’

‘Type A are to be shipped no later than 20 june 2OXX.’

‘Type B are to be shipped no later than 1 5 August 2OXX.’

‘Type C are to be shipped no later than 30 September 2OXX.’

 

The beneficiary makes a presentation on 30 June 2OXX, which includes one complete set of documents, but two sets of bills of lading issued as follows one set of onboard bills of lading dated 19 June 2OXX covering shipment of 175 Type A cars; and one set of onboard bills of lading dated 21 June 2OXX, covering shipment of 25 Type A cars.

 

The documents are discrepant, but which of the following is correct?

 

  1. The credit ceases to be available for this drawing and the subsequent instalments.
  2. The credit ceases to be available for the subsequent instalments.
  3. Late shipment applies because 25 cars were shipped on 21 June, but the credit remains available

for the subsequent instalments.

  1. Late shipment applies because 25 car4wereshipped on1 June and the credit ceases to be available

for the subsequent instalments.

 

The correct answer is C. Field 45A consists of a series of latest shipment dates, as opposed to a requirement for three shipments to be made within given periods. In effect, all cars could be shipped by 20 June 2OXX. Late shipment has occurred for the shipment of 25 cars shipped on 21 June. Because the shipments were not stated to occur within given periods, UCP 600, article 32, will not apply and the credit will remain available for the beneficiary to make the remaining shipment(s).

 

  1. Against what does a letter of indemnity indemnify the holder?

 

  1. Failure of the applicant to pay
  2. Failure of the issuing bank to pay
  3. The absence of a commercial invoice

D The absence of an original charter party bill of lading

 

The correct answer is D. An LOI is issued in respect of the absence of a set of original charter party bills of lading.

 

  1. In most jurisdictions, after how long will a carrier’s indemnity (shipping guarantee) that contains no expiry date expire?

 

  1. Six months
  2. Six or seven years
  3. Four or five years
  4. One or two years

 

The correct answer is B. Shipping guarantees and indemnities that are issued without an expiry date will usually be considered null and void after a period of six or seven years, which represents the statute of limitations that applies in most legal jurisdictions.

 

  1. Which of the following will not normally be included in a syndication agreement?

 

  1. Validity for shipment and expiry
  2. Type of amendments that may be issued
  3. A list of all required documents
  4. The type and nature of the goods

 

The correct answer is C. A list of the required documents will usually be left to the applicant and beneficiary to determine.

 

  1. Which of the following accurately describes a revocable documentary credit?

 

  1. It may be cancelled at any time.
  2. It may be amended at any time.
  3. it may be cancelled or amended at any time and without the prior consent of the beneficiary.
  4. It may be cancelled or amended without the prior consent of the beneficiary.

 

The correct answer is C. It is an amalgamation of the options shown in A, B and D.

 

 

 

Chapter 21

Standby letters of credit

 

  1. What is the type of standby letter of credit that is intended to be the primary means of payment?

 

  1. Financial
  2. Direct pay
  3. Performance
  4. Advance payment

 

The correct answer is B. A direct-pay standby is a type of standby that is intended to be drawn under. For example, it will allow for interest payments when the standby covers a-loan to the applicant.

 

  1. An issuer of a standby subject to 1SP98 is responsible for which of the following?

 

  1. The accuracy of any document
  2. Any act of omission by the nominated bank
  3. The observance of law, as stated in the standby
  4. The performance of any underlying transaction

 

The correct answer is C. ISP98, rule 1.08, states that an issuer is not responsible for the observance of law or practice other than that chosen in the standby or applicable at the place of issuance. Therefore an issuer is responsible for the observance of law as stated in the standby.

 

  1. The issuing bank of a standby credit subject to lSP98 acknowledges an instruction from the beneficiary to assign proceeds. Which of the following statements is incorrect?

 

  1. The rights of the assignee are subject to the rights of any other acknowledged assignee.
  2. The rights of the assignee are subject to the rights of any other assignees, pending acknowledgement.
  3. The rights of the assignee are subject to any other rights or interests that may have priority under the applicable law.
  4. The rights of the assignee are subject to the existence of any net proceeds payable to the beneficiary by the person making the acknowledgement.

 

The correct answer is B. According to ISP98, rule 6.07(b), the rights of the assignee are not subject to the rights of any other assignee, pending acknowledgement.

 

  1. A standby letter of credit that supports the obligations of an applicant to pay for goods or services in the event of non-payment by another method is usually described as which of the following?

 

  1. A financial standby
  2. A direct-pay standby
  3. A commercial standby
  4. An advance payment standby

 

The correct answer is C. This type of standby is commonly described as a ‘commercial standby’.

  1. Which of the following is true of a standby credit subject to ISP98 that states that it is not operative?

 

  1. It is irrevocable from date of issue.
  2. It is deemed not to have been issued.
  3. It is available for drawing immediately.
  4. It is revocable prior to becoming operative.

 

 

The correct answer is A. ISP 98, rule 2.03, states that unless the standby indicates that it is not then ‘issued’ or ‘enforceable’, a statement that it is not operative does not affect its irrevocability and binding nature when ¡t leaves the issuer’s control.

 

 

Chapter 22

 

Bank-to- bank reimbursements and reimbursements from a aid agencies

 

 

  1. A reimbursing bank has a maximum of how many banking days following the day of receipt of a reimbursement claim in which to process it?

 

  1. Two
  2. Three
  3. Four
  4. Five

 

The correct answer is B. URR 725, sub-article 11(a)(i), states that a reimbursing bank shall have a maximum of three banking days following  the day of receipt of the reimbursement claim in which to process the claim.

 

  1. Which of the following is not a true statement?

 

  1. Reimbursement may be made subject to UCP 600, sub-articles 1 3(b) and (c).
  2. Reimbursement may be made subject to URR 725.
  3. Reimbursement may be made subject to URR 725 and UCP 600, sub-articles 1 3(b) and (t).
  4. Reimbursement may be made subject to URR 725, with certain modifications or exclusions made in the reimbursement authorization.

 

The correct answer is C. UCP 600, sub-article 1 3(a), requires a documentary credit to indicate whether URR 725 is to apply to the reimbursement conditions. UCP 600, sub-articles 13(b) and (c), will apply only where URR 725 is not applicable.

 

  1. An issuing bank’s instruction to a reimbursing bank requesting issuance of a reimbursement undertaking subject to URR 725 must indicate which of the following?

 

  1. Whether partial drawings are allowed
  2. The latest date for presentation of a claim, including the usance period

iii. The expiry date of the documentary credit

  1. That the claiming bank must certify compliance with the credit terms

 

  1. ii only
  2. iii only

ii and iii only

  1. ii, iii and iv only

 

The correct answer is A. There must be an indication of the latest date for presentation of a claim, including the usance period. For a sight transaction, the latest date would need to reflect the expiry date of the documentary credit plus a period for the examination of documents and a claim to be made, should the documents be presented to the nominated (claiming) bank on or shortly prior to the expiry date. (See also URR 725, sub-article 9(e)(v).)

 

  1. A reimbursing bank has received a valid claim under its reimbursement undertaking and is simultaneously instructed by the issuing bank not to honour the claim. In accordance with URR 725, how should the reimbursing bank proceed?

 

  1. It should request the claiming bank to cancel the claim.
  2. It should instruct the claiming bank to contact the issuing bank.
  3. It should honour the claim and debit the issuing bank’s account.
  4. It should dishonour the claim as per the issuing bank’s instruction.

 

The correct answer is C. The reimbursing bank has given its own independent undertaking to the claiming bank that it will honour a complying claim.

 

Any disputes between the issuing bank and the nominated (claiming) bank should be resolved without the involvement of the reimbursing bank.

 

  1. In the event that a reimbursing bank does not honour a claim under a reimbursement authorization for which no reimbursement undertaking has been issued, who is responsible under URR 725 for the interest in the delay in reimbursement?

 

  1. The beneficiary
  2. The issuing bank .
  3. The reimbursing bank
  4. The claiming bank

 

The correct answer is B. URR 725, article 1 7, indicates that any claim for interest is between the claiming bank and the issuing bank.

 

 

Chapter 23

 

eUCP

 

  1. Which of the following is true if a bank requests that an electronic record be represented because the initial presentation appears to be corrupted?

 

A The date of the re presentation becomes the new presentation date

  1. The beneficiary has 21 calendar days in which to re-present the electronic record.
  2. The time for examination is suspended and resumes when the re-presented record is received.
  3. The re-presentation may be with paper documents, even if the documentary credit calls for electronic records.

 

The correct answer is C. eUCP, sub-article e 11 (b) (i), states that the time for examination is suspended and resumes when the presenter re-presents the electronic record.

 

  1. Complete the following sentence.

Notice of completeness under eUCP is sent by the

 

  1. confirming or nominated bank to the issuing bank, confirming receipt of electronic and paper documents.
  2. presenting bank to the confirming bank or the issuing bank, signifying that the presentation is complete.
  3. beneficiary to the bank to which presentation is made, signifying that the presentation is complete.
  4. bank to which presentation is made, to the beneficiary, signifying that the bank has received the complete presentation.

 

The correct answer is C. eUCP, sub-article e5(c), states that the beneficiary is responsible for providing a notice of completeness to the bank to which presentation has been made.

 

  1. Which of the following is true of eUCP?

 

  1. They are a set of stand-alone rules.
  2. They are a supplement to UCP 600.
  3. They are a publication that indicates the international banking practice that applies to electronic

records.

  1. They are a set of guidelines for use with electronic records.

 

The correct answer is B. eUCP, sub-article e1 (a), describes the publication as a supplement to the UCP 600.

 

  1. Which of the following is true of a credit that is subject to eUCP?

 

  1. It is also subject to UCP 600 without express incorporation of the UCP.
  2. It is also subject to UCP 600 if there is express incorporation of the uCP.

C: It is subject to the UCP if the parties so agree.

  1. It is subject to the UCP if the parties so agree in a written agreement.

 

The correct answer is A. ’eUCP, sub-article e2(a), states that a credit subject to the eUCP is also subject to UCP 600 without express incorporation of the latter.

 

  1. If an eUCP credit does not specify the format in which electronic records are to be presented, how may the electronic record be presented?

 

  1. tri paper format only
  2. In a PDF attached to an email
  3. In any format
  4. As a scanned or faxed form

 

The correct answer s C. eUCP, article e4, states that if the format of the electronic record is not specified in a eUCP credit, it may be presented in any format.

 

 

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