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Review Questions On Documents and Payment Methods

This document contains a review of questions on documents and payment methods used in international trade. It includes multiple choice questions, an example letter of credit application form to fill out, an example bill of exchange form, and additional questions about import/export documents and international payment methods. The multiple choice questions cover topics like types of letters of credit, responsibilities in documentary collections, parties that review documents in letters of credit, advantages of different payment methods, and more. The letter of credit application form provides sample fields to fill out like applicant, beneficiary, amount, shipping details, required documents, and instructions. The additional questions cover common invoice types, certificates of origin, bills of lading, types of letters

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65 views10 pages

Review Questions On Documents and Payment Methods

This document contains a review of questions on documents and payment methods used in international trade. It includes multiple choice questions, an example letter of credit application form to fill out, an example bill of exchange form, and additional questions about import/export documents and international payment methods. The multiple choice questions cover topics like types of letters of credit, responsibilities in documentary collections, parties that review documents in letters of credit, advantages of different payment methods, and more. The letter of credit application form provides sample fields to fill out like applicant, beneficiary, amount, shipping details, required documents, and instructions. The additional questions cover common invoice types, certificates of origin, bills of lading, types of letters

Uploaded by

gdragon7012
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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REVIEW QUESTIONS ON DOCUMENTS AND PAYMENT METHODS

I. Multiple Choice Questions

1. Which type of LC allows beneficiary to draw partial advance payments?


a) Irrevocable credit
b) Red clause credit
c) Revolving credit
d) Irrevocable transferable credit
2. The currency for payment must be one of either country of import or country of export?
a) True
b) False
3. Of all types of collection, the responsibility of the Presenting bank is:
a) Present the shipping documents to the importer
b) Hold the shipping documents until the importer pays
c) Hold the shipping documents until the importer accepts to pay
d) None of the above statements
4. When the payment method is Documentary Collection, the Remitting bank must examine the received documents as in
the collection instruction from the exporter to make sure that all information is correct:
a) True
b) False
5. The party decides whether the documents received are in strict compliance with the requirements on the L/C is:
a) Issuing bank
b) Applicant
c) Presenting bank
d) Remitting bank
6. To reduce the risk in foreign trade, the exporter should choose clean collection instead of documentary collection:
a) True
b) False
7. The advantages of the exporter in D/A and D/P are the same:
a) True
b) False
8. There must be the word “Clean” printed on a clean B/L:
a) True
b) False
9. An L/C is issued by _____.
A. exporter B. exporter's bank C. importer D. importer's bank
10. If an exporter is doubtful about an issuing bank's ability to pay, he will expect a domestic bank to join the transaction
in a _____ letter of credit.
A. revolving B. irrevocable C. revocable D. confirmed
II. Fill in the below Application for an LC with the given information:

Seller: Phillips (Singapore) JSC.

Buyer: Thanh Long Ltd. Co

The parties hereby agree to buy and to sell the goods under the following terms and conditions:

1. Commodity: Water Filter, Singapore origin.

2. Description: As per the Commercial Invoice No.2320/18

3. Quantity: 100,000 units

4. Price: USD 80.00/unit; CIF HaiPhong port, Incoterms 2010.

5. Packing and Marking: In export standard packing, suitable for long sea voyage to be marked “ASC”

6. Shipment: In Dec 2020 from Singapore to HaiPhong port, Vietnam after the issuance of L/C.

7. Insurance: To be covered by the Seller for 110% of invoice value

8. Payment: By Confirmed Irrevocable L/C at 30 days’ sight No. 2124/AH/370

9. Documents required: In triplicate

(1) Signed commercial invoice

(2) 3/3 original shipped on board ocean B/L


(3) Packing List

(4) C/O

(5) Certificate of Quality/ Quantity issued by SGS.

(6) Insurance policy covering 110% of invoice value blank endorsed indicating claim payable in HaiPhong city in
invoice currency.

(7) Copy of fax advising applicant of particulars of shipment

- Partial shipment is allowed; transshipment is prohibited

- Documents shall be presented within 30 working days after B/L date.

10. Charges and Claims

- All banking charges within Vietnam for Buyer’s account. Other charges arising outside Vietnam is for the Seller’s
account.

- All claims by the Buyer shall be made in writing and confirmed within 30 days after unloading together with Survey
Report issued by SGS.

………………………………………

Fill in the L/C application below.

APPLICATION FOR A LETTER OF CREDIT


To: VIETINBANK, HAIPHONG CITY, VIETNAM

Date of this application: 01/12/2012

With all our obligations we hereby request the bank to open the Irrevocable Letter of credit for our account in
accordance with the following instructions:

- APPLICANT: (1) ……………………………………

- BENEFICIARY: (2) ……………………………

- ADVISING BANK: STANDARD CHARTERED SINGAPORE

- AMOUNT: (3) ………………………………………

AVAILABLE BY BENEFICIARY'S DRAFT(S) DRAWN ON APPLICANT AT SIGHT FOR 100 PERCENT INVOICE VALUE
ACCOMPANIED BY THE FOLLOWING DOCUMENTS IN TRIPLICATE.

1. SIGNED COMMERCIAL INVOICE

2. FULL SET OF CLEAN SHIPPED ON BOARD OCEAN BILL OF LADING MADE OUT TO ORDER BLANK ENDORSED
MARKED “(4)……………………………………”, AND NOTIFY THE ACCOUNTEE

3. QUALITY/QUANTITY CERTIFICATE ISSUED BY SGS

4. INSURANCE COVERED BY INSURANCE POLICY/CERTIFICATE DUPLICATE COVERING (5)…………………………………

5. CERTIFICATE OF ORIGIN ISSUED BY THE CHAMBER OF COMMERCE OF (6)………………………………………….

6. DETAILED PACKING LIST


7. COPY OF CABLE ADVISING ACCOUNTEE OF PARTICULARS OF SHIPMENT AND ALSO TELEX VIETNAM VIETINBANK
DELIVERY DATE, INVOICE VALUE AND LC NUMBER RIGHT AFTER SHIPMENT

8. RECEIPT OF SHIPMASTER ACKNOWLEDGING DUE RECEIPT OF SETS OF NON NEGOTIABLE DOCUMENTS FOR
TRANSMISSION TO HAIPHONG CITY AT DESTINATION PORT OF HAIPHONG

9. OTHER DOCUMENTS (IF ANY)

SHIPPING DOCUMENTS EVIDENCING SHIPMENT FROM (7) ………………………………………………… TO HAIPHONG PORT OF


VIETNAM

- SHIPMENT MUST BE EFFECTED NOT LATER THAN (8) ………………

- PARTIAL SHIPMENT (9) ………………………………………….

- TRANSSHIPMENT(10) ………………………………………………

ALL BANKING CHARGES OUTSIDE HAIPHONG CITY AND AMENDMENT CHARGES AT SELLER'S ACCOUNT.

INSTRUCTIONS TO NEGOTIATING BANKS

- ON RECEIPT DOCUMENTS IN COMPLIANCE WITH TERMS AND CONDITIONS OF CREDIT REIMBUSEMENT PLEASE
SEND DOCUMENTS TO US IN 02 REGISTERED AIRMAILS.

- UPON RECEIPT OF YOUR TESTED CABLE ADVICE OF NEGOTIATION CERTIFYING TO US THAT ALL TERMS AND
CONDITIONS OF THE CREDIT HAVE BEEN COMPLIED WITH WE SHALL REIMBURSE TO YOU

ACCORDING TO YOUR INSTRUCTIONS IN THE CURRENCY OF THE CREDIT.

- UCPDC 1983 REVISION ICC 500 REFERRED


- OPERATIVE INSTRUMENT PLEASE NOTIFY

VIETINBANK HAIPHONG CITY

III. Create a B/E with the following information


- Importer: Sony Electronics, 13600 Perai Province Wellesley, Penang, Malaysia.
- Exporter: Sony Vietnam LTD., 248A No Trang Long St., Binh Thanh Dist., Ho Chi Minh
City, Vietnam.
- Means of payment: D/A 240 days after sight.
- Amount of payment: USD 5,931.00
- Importer’s Bank: Indosuez Bank.
- Exporter’s Bank: Vietcombank Ho Chi Minh City branch.
- Date of shipment: 18/01/2016.
- Invoice no.: IV2015/30/09/MH dated: 15/01/2016
IV. Other questions
Import and Export documents
1. What are the common types of invoice in foreign Trade? State the purposes of each type?
2. What is a C/O (Certificate of origin)? What are the common forms of C/O and in which countries are they used?
3. What is a Certificate of Inspection? How many types of Certificates of Inspection are there? What are the purposes of
each type of such certificate?
4. What is a Bill of Lading? What are the purposes of a Bill of Lading?
5. How many types of Bill of Lading are there? In which cases are they used?
6. What is an Airway Bill? What is the importance of an Airway Bill?
International payment
1. What is a Bill of Exchange (Draft)? Which parties participate in B/E circulation? What are the features of a Bill of
Exchange?
2. In terms of payment time, how many types of Bill of Exchange? What are they? In what cases are they used?
3. What is Open Account? In what cases are they used?
4. What is Clean Collection? In what cases are they used?
5. What is Documentary Collection? What is D/P and What is D/A? In what cases are they used?
6. What is a Letter of Credit? Which parties participate in payment by L/C?
7. How many types of L/C are there? What are they? In which cases are they used?
8. How many steps are there in negotiating the terms of a letter of credit? What are they?
9. State the common discrepancies in documents in payment by L/C which will result in non-payment by a paying bank.
10. State the common problems with the Bill of Lading in payment by L/C which will result in non-payment by a paying
bank.
11. State the common problems with insurance in payment by L/C which will result in non-payment by a paying bank.
12. State the common discrepancies among documents in payment by L/C which will result in non-payment by a paying
bank.

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