UCP 600 may be applied to A) Documentary Credits only B) Standby Credits only C) Guarantees only
Documentary credits and Standby Credits E) Documentary Credits, Standby Credits and Guarantees
D)
2. A beneficiary received a credit where a clause in the additional condition stated. “Article 37 (d) does not apply (i.e.
Applicant shall be bound by and liable to indemnify the banks against all obligations and responsibilities imposed by
foreign laws and usage)”. Can a credit be issued in this manner? A) Yes B) No
Article 23. Negotiation means the purchase by the nominated bank of A) Drafts drawn on itself B) Drafts drawn on a
bank other than itself
4. LC is restricted to BKA Bank, Jakarta, Indonesia by Negotiation. Can BKA Bank, Bandung, Indonesia negotiate the
documents? A) Yes B) No
5. A documentary credit is available with ABC Bank, Hong Kong by negotiation at 30 days after shipment date. On
presentation of credit compliant documents, which of the following actions by ABC Bank, Hong Kong constitutes
negotiation? A) Forward documents to issuing bank for payment at maturity date B) Pay the beneficiary and forward
documents to issuing bank C) Agree to pay the beneficiary, once the documents are accepted by the issuing bank
and forward the documents to issuing bank Options I. B only II. C only III. B and C IV. A and C
6. Can a Bank issue LCs on its own behalf? A) Yes B) No
Article 37. UCP 600 considers branches of bank in different countries as another A) True B) False
8. An issuing bank should honour the documents presented under the LC when A) All terms and conditions of the
credit are complied with B) All terms and conditions of the sales contract are complied with C) Goods are shipped as
per sales contract specifications D) All of the above
9. If a credit requires presentation of a “Phytosanitary certificate issued by a competent authority”, the phytosanitary
certificate may be issued by A) A government authority B) The Department of Agriculture C) Anyone except the
beneficiary
10. A credit states that it is a available for one month ( and does not state any expiry date). What is the deemed expiry
date? A) One month from date of advising B) One month from the date of issue C)One month from the date of
invoice D) Any of the above
11. LC states shipment to be made during the middle of the month. How should this period be interpreted? A) 10th to
20th day of month B) 11th to 20th day of month C) 10th to 21st day of month D) 11th to 21st day of month
12. LC states shipment to be made on or about 27-Sep-08. Which of the following shipment dates would be
acceptable? A) 20-Sep-8 B) 02-Oct-08 C) 03-Oct-08
13. A credit requires shipment to be effected “immediately” upon receipt of LC. The LC was issued on 10-Jan-09 and
expires on 31-Jan-09. When should the beneficiary ship the goods? A) 10-15 Jan 2009 B) On or before expiry date
Article 4
14. A credit is issued by us calling for shipment of ‘Spare Parts as per Sales Contract no 5643’. On receipt of
documents, the applicant requested us to check the model number in the packing list with the sales contract. The
model numbers were different but the invoice clearly stated ‘Spare Parts as per sales contract no 5643’. The
documents are otherwise compliant. As per UCP we: A) Should pay at sight B) Refuse the documents
15. Beneficiary cannot avail contractual relationship between Applicant and Issuing Bank. A)True B) False
16. An applicant of the credit request the ZBO Bank to insert the following clause in goods description “Spare parts as
per Proforma Invoice No.123 Rev 1 which is an integral part of this credit”. Is this possible A) Yes B) No Article 5
17. A credit provides goods description as ‘Cotton Shirts’. On receipt of the goods, the applicant found that a few shirts
were not made from of cotton. Documents presented to the issuing bank all evidence goods as ‘Cotton Shirts’. Can
the issuing bank refuse the documents on the basis that a few shirts shipped are not cotton? A) Yes B) No Article 8
18. Green Exports receives a credit that is available with ABC Bank by Payment. ABC Bank has advised the credit but
not confirmed the Credit. Green Exports ships the goods as they are confident ABC Bank will pay, because credit
says so. Which of the following is true? A) Green Exports is correct, as nominated bank i.e. ABC Bank has to pay
B) ABC Bank is not obligated to pay as they have not confirmed the credit and specifically indicated that they will pay
C) ABC Bank will pay if they are satisfied about Green Exports creditworthiness
19. ABC Bank negotiates documents presented by Green Exports, Indonesia and sends it to issuing bank. The issuing
bank accepts documents and sends it to the applicant. The applicant finds that the inspection certificate does not
conform to the LC and demands issuing bank reverse debit. Who must bear the loss? A)Applicant B) Issuing Bank
C)Negotiating Bank D) Reimbursing Bank
20. In field 46A (Documents Required), a draft to be drawn on applicant is called for. Must the draft be checked for
compliance with terms and conditions of the credit? A)Yes B)No
21. Extract from the LC Issuing Bank : Navy Bank, Chittagong Beneficiary : Smith Inc, New York Nominated
Bank : Red Bank, New York Confirming Bank : Maroon Bank, Chicago LC is available by : Negotiation Credit
compliant documents are presented to Red Bank, New York for negotiation. Red Bank, New York checks the
documents and finds it compliant but is unwilling to negotiate. Smith Ltd sends the documents to Maroon Bank,
Chicago and requests them to negotiate the documents. Is Maroon Bank, Chicago obligated to negotiate? A) Yes
B) No
22. In Question 21, if Maroon Bank, Chicago advances funds to Smith Ltd, do they have recourse to Smith Inc, in case
of payment default by Navy Bank? A)Yes B) No
23. A confirmed Credit constitutes a irrevocable undertaking of the Confirming Bank provided 1. Terms and conditions
of the Credit are complied with 2. Documents are presented to Issuing Bank 3. Documents are presented to
Confirming Bank 4. Documents are presented to Confirming Bank or Nominated Bank Options A) 1 and 2 B) 1 and 3
C)1 and 4 Article 9
24. If a Bank elects not to advise the Credit, It must inform ____________without delay A)Applicant B) Beneficiary
C) Issuing Bank
25. Which of the following is a responsibility of an advising bank? A) Establish authenticity of the credit B) Advise the
opening bank if they are not willing to advise the credit C) Revert to the opening bank if the authenticity cannot be
established D) All of the above
26. A credit was advised through Navy Bank, Taipei. Can an amendment to this credit be advised through Maroon
Bank, Taipei? A) Yes B) No
27. An LC is sent via authenticated teletransmission by the issuing bank to the advising bank. Subsequently the
advising bank receives an airmail confirmation of the same LC which is sent to the beneficiary. The beneficiary noticed
that some of the terms were different in the airmail LC. However, they had already shipped the goods in terms of the
teletransmission and presented documents to the advising bank (who is also the nominated bank) for negotiation. The
documents are found to comply with the terms and conditions as outlined in the teletransmission. Which of the
following statements are true? A) The advising bank must contact the issuing bank for clarification before negotiation
B) The advising bank should have checked the airmail LC C) The advising bank may negotiate and the issuing bank
must honour
28. An LC amendment extends the late shipment date and curtails the LC expiry date. The beneficiary only wishes to
accept the extension of late shipment date. The beneficiary: A) Is only permitted to accept or reject both terms
B) Can choose to accept either term without giving notice to anyone C) Can choose to accept either term by giving
notice to the issuing bank.
29. Iris Bank requests Canary Bank to add its confirmation to a credit issued by it. Iris Bank subsequently increased
the credit amount and Canary Bank advised the amendment to the beneficiary. On receipt of credit compliant
documents, Canary Bank refused to pay stating that its confirmation was not extended to the amendment. Which of
the following is true? A) Canary bank must pay B) Canary bank need not pay C) Canary bank must pay to the extent
of the original credit
30. Which of the following parties need to agree to an LC amendment in order for it to be binding on them? A)
Advising Bank, Issuing Bank, Applicant and Beneficiary B) Issuing Bank, Advising Bank and Beneficiary C) Issuing
Bank, Confirming Bank and Beneficiary
31. A Credit issued for USD 10,000 states that partial shipments are allowed. An amendment to the credit is issued
increasing the credit amount to USD20,000. The Beneficiary does not explicitly accept/ reject the amendment but
presents documents USD20,000. This means that the: A)Beneficiary has accepted the amendment B) Not accepted
the amendment as the beneficiary has not given a express communication
32. A credit issued for USD10,000 states that partial shipments are allowed. An amendment to the credit is issued
increasing the credit amount to USD 20,000. The Beneficiary does not explicitly accept/ reject the amendment but
presents documents USD10,000. This means : A) Beneficiary has accepted the amendment B) Beneficiary has not
accepted the amendment as the beneficiary has not given a express communication C) We do not know if the
beneficiary has accepted/ rejected the amendment at this point
33. A credit issued for USD 10,000 states that partial shipments are not allowed. An amendment to the credit is issued
increasing the credit amount to USD 20,000. The beneficiary does not explicitly accept/ reject the amendment but
presents documents USD 10,000. This means : A) Beneficiary has accepted the amendment B) Beneficiary has not
accepted the amendment
34. A credit issued for USD 10,000 states that partial shipment are not allowed. An amendment to the credit is issued
increasing the credit amount to USD 20,000. The beneficiary does not explicitly accept/ reject the amendment but
presents documents USD 15,000. This means A) Beneficiary has accepted the amendment B) Beneficiary has not
accepted the amendment C)We do not know if the beneficiary has accepted/ rejected the amendment at this point
(and we can quote discrepancy as LC Overdrawn/ Partial Shipment)
35. A preliminary advice of a credit indicates the latest shipment date as 10-Aug-2009. The applicant of the LC wishes
to extend it to 10-Sep-2009. What should be the issuing bank’s course of action? A) Keep 10-Aug as the last date of
shipment while issuing the credit B)Include 10-Sep as the last date of shipment while issuing the credit as it is
beneficial to the beneficiary C) Issue credit with 10-Aug as the last date of shipment date and issue amendment with
10-Sep as the last date of shipment
36. Extract from the LCLC issue date: 06-Nov-2008 Issuing :Export Import Bank, Tokyo Beneficiary : Green Cars Ltd,
Mumbai Applicant : New Age Cars Ltd, Tokyo Partial shipment : Not allowed Amount : EUR 200,000Goods
Description
:
10 Electric Cars Nominated Bank : Maroon Bank, Mumbai LC Amendment No 1 issued on
19-Dec-2008Goods description – 20 electric cars LC Amount – EUR 400,000 On 20-Dec-2008, documents presented
by Maroon Bank, Mumbai reach Exports Import Bank, Tokyo Maroon Bank’s covering schedule stated discrepancies –
Over shipment effected and LC amount overdrawn. The invoice presented shows shipment of 20 electric cars for EUR
400,000. Goods were shipped on 05-Dec-2008 The issuing bank refused documents stating (a) Over shipment (b) LC
overdrawn (c) Amendment will not apply as it was issued on 19-Dec and shipment was made on 05-Dec. Is the
issuing bank correct? A) Yes B) No Article 12
37. XYZ Bank, London issued a letter of credit with the following terms Available with: ABC Bank, Hong Kong by
acceptance Drafts at: 60 days after bill of lading date Drawn on: ABC Bank, Hong Kong ABC Bank, Hong Kong has
not added its confirmation to the LC. The beneficiary presented credit compliant documents to ABC Bank, Hong Kong
along with a draft drawn on ABC Bank, Hong Kong as per LC terms. Should ABC Bank, Hong Kong accept the draft?
A) Yes B) No
38. In question 37, can ABC Bank, Hong Kong request that the drafts be replaced with a draft drawn on XYZ Bank,
London? A) Yes B) No
39. A credit is restricted to ABC Bank, Seoul by Negotiation. Documents presented to ABC Bank, Seoul and are found
credit compliant. ABC Bank does not wish to negotiate. Can the beneficiary insist that they negotiate the documents?
A) Yes B) No Article 13
40. An issuing bank should not require a claiming bank to supply a certificate of compliance with the terms and
conditions of the LC to the reimbursing bank A) True B) False
41. The claiming bank incurred a loss as reimbursement is not provided by the reimbursing bank on first demand in
this case, the: A) Issuing Bank should bear the loss B) Advising Bank should bear the loss C) Claiming Bank should
bear the loss D)Reimbursing Bank should bear the loss
42. If a credit is silent as who should bear the reimbursing bank’s charges, who will bear the charges? A)Claiming
Bank B) Issuing Bank C) Reimbursing bank should waive its charges
43. Documents are received by the issuing bank on 04-Dec-2008 (THU). What is the latest date by which the issuing
bank can communicate its rejection of documents? (Assume that there are no bank holidays except Saturday and
Sunday) A) 08-Dec-2008 B)11-Dec-2008 C) 10-Dec-2008
44. The additional condition in a credit states. “Goods to be shipped in a vessel no more than 15 years of age” No
other further reference is made to this in the LC. Documents presented did not contain any reference to the age of the
vessel. A nominated bank should A)Disregard the clause B) Request the beneficiary to include the age of the vessel
on one of the documents C) Refuse documents D) Seek clarification from issuing bank
45. A nominated bank received a document not required in the credit. They paid the beneficiary as the presentation
was compliant. Along with the payment advice, the nominated bank returned the additional document. The beneficiary
did not realize that the document was returned. The applicant was unable to take over the goods because the
‘additional’ document was not provided. Who is responsible for the applicant’s loss? A)Beneficiary B) Nominated
Bank C) Applicant themselves D) Depends on a case tot case basis
46. A credit requires presentation of a draft. The beneficiary presents a bill of exchange satisfying the LC condition.
The issuing bank is unwilling to pay the confirming bank stating that bill of exchange format is not sufficient. Is their
claim valid? A) Yes B) No
47. A credit requires presentation of a certificate quality. A document titled ‘Certificate of quality’ was presented which
only contained the following: “The Gross Weight and Net Weight is 1,000 kilos and 950 kilos respectively”. Is the
document acceptable? A) Yes B) No
48. A credit requires presentation of a certificate of inspection to be issued by XYZ Inspection Company. The
certificate of inspection presented was issued by XYZ Inspection Company and mentioned that the goods were of
poor quality. Is the document acceptable? A) Yes B) No
49. A credit requires presentation of a certificate of inspection. The certificate of inspection presented was issued by
the beneficiary. Is the document acceptable? A) Yes B) No
50. The beneficiary presented an invoice which was dated prior to the date of the LC. The nominated bank should: A)
Refuse the documents B) Treat invoice as complying to change the date C) Request the beneficiary to change the
date