A container is loaded in the town of Shenzhen and trucked to Yantian port where it is loaded on board a ocean vessel to Hamburg.

Then reloaded onto a feeder vessel and discharged in Copenhagen port. After arriving Copenhagen port container is trucked to
consignees warehouse in the town of Roskilde. Finally goods are costumed cleared and ready to use or sell.
1. What is the correct town/port to use after INCOterm EXW for above scenario?
a) EXW Shenzhen
b) EXW Yantian
c) EXW Roskilde
2. What is the correct town/port to use after INCOterm FCA for above scenario?
a) FCA Copenhagen
b) FCA Yantian
c) FCA Roskilde
3. What is the correct town/port to use after INCOterm FOB for above scenario?
a) FOB Shenzhen
b) FOB Yantian
c) FOB Hamburg
4. What is the correct town/port to use after INCOterm CFR for above scenario?
a) CFR Yantian
b) CFR Hamburg
c) CFR Copenhagen
5. What is the correct town/port to use after INCOterm CIF for above scenario?
a) CIF Yantian
b) CIF Hamburg
c) CIF Copenhagen
6. What is the correct town/port to use after INCOterm DDU for above scenario?
a) DDU Roskilde
b) DDU Copenhagen
c) DDU Shenzhen
7. What is the correct town/port to use after INCOterm DDP for above scenario?
a) DDP Shenzhen
b) DDP Copenhagen
c) DDP Roskilde
8. When using INCOterm EXW Shenzhen what part of the freight has shipper paid?
a) Export documents and loading of container
b) Trucking from Shenzhen to Yantian
c) Nothing
9. When using INCOterm FCA Shenzhen what part of the freight has shipper paid?
a) Loading of container
b) Export documents and loading of container
c) Nothing
10. When using INCOterm FCA Yantian what part of the freight has shipper paid?
a) Export documents and loading of container
b) Export documents, loading of container and trucking to Yantian port
c) Export documents, loading of container, trucking and origin Terminal Handling Charges in Yantian port
11. When using INCOterm FOB Yantian what part of the freight has shipper paid?
a) All local charges until cargo is delivered to Yantian port
b) All local charges until cargo passes ships rail at Yantian port
12. When using INCOterm CFR Copenhagen what part of the freight has shipper paid?
a) Freight from loading Shenzhen until cargo is delivered in Copenhagen port
b) Freight and insurance from loading Shenzhen until cargo passes ships rail in Copenhagen port
c) Freight from loading Shenzhen until cargo passes ships rail in Copenhagen port
13. When using INCOterm CIF Copenhagen what part of the freight has shipper paid?
a) Freight and insurance from loading Shenzhen until cargo passes ships rail in Copenhagen port
b) Freight and insurance from loading Shenzhen until cargo is delivered in Copenhagen port
c) Freight from loading Shenzhen until cargo passes ships rail in Copenhagen port
14. When using INCOterm DDU Roskilde what part of the freight has shipper paid?
a) All freight charges until cargo is delivered and customs cleared to Roskilde
b) All freight charges until cargo is delivered but not customs cleared to Roskilde
c) All freight charges until cargo is delivered to Roskilde and duty paid
15. When using INCOterm DDP Roskilde what part of the freight has shipper paid?
a) All freight charges until cargo is delivered to Roskilde and duty and VAT paid
b) All freight charges until cargo is delivered to Roskilde and duty paid
c) All freight charges until cargo is delivered to Roskilde and VAT paid

CDCS/2
1. Buyer is exposed to the following risks under Advance Payment Method
a) Country risk of seller
b) Sellers bank risk
c) Seller credit risk
d) Country risk of buyer
(1) A&D
(2) A&C
(3) A,C&D
(4) A,B,C&D
2. Which of the following is a reason for adapting advance payment terms
a)
b)
c)
d)

two companies have a long established trading relationship

buyer wishes to engage the seller in a long term relationship
seller is confident with the buyers country risk
none of the above
3. Which of the following is NOT a reason for adapting open account terms

a)
b)
c)
d)

Two companies have a long established trading relationship

Buyer wishes to engage the seller in a long term relationship
Lesser banking fees
Seller is confident with the buyers country risk
4. An exporter based in New York has agreed to sell goods to a company in London. The importer is responsible for arranging freight and insurance.
Which of the following shipping terms is correct?
A.

CIF London

B.

FAS London

C.

CIF New York

D.

FAS New York

5.What is the applicable Incoterm for an Airway Bill marked freight prepaid?
A.

FCA

B.

CFR

C.

CPT

D.

D.DAF

6. Which of the following is NOT a characteristic of DES?

a)
b)
c)
d)

Contract of carriage will be between the seller and the carrier

Seller is responsible for loading and unloading costs
Risk of loss / damage to the goods between port of loading and port of discharge is for sellers account
Buyer is responsible for obtaining import clearance

7. Quality export Inc enters into an agreement with Excel Exim Ltd to ship footwear from India to USA.
The incoterm specified in the contract is FCA Chennai. Excel Exim Ltd has nominated reliable shipping as the carrier.
Which of the following statements is FALSE?
a)
b)
c)
d)

Quality Export Inc must deliver the goods to the carrier premises unloaded from the arriving means of transport
If the goods are picked from reliable shipping from Quality Export Incs premises. Quality Export Inc is responsible for loading the goods into carriers means of transport
Contract for carriage will be between Excel Exim Ltd and reliable shipping
Risk of damage to the goods after they are delivered to reliable shipping will be for the account of Excel Exim Ltd
8 . Your customer advises you that they have concluded an export sale contract with an overseas buyer.
The buyers country is highly volatile and subject to frequent strikes by pot workers, factories, civil servants and bank staff.
What is the best way for a customer to cover themselves regarding this sale

a)
b)
c)
d)

Send documents on collection basis and instruct the collecting bank to release documents against payment
Trade on CIF terms and arrange for an insurance cover that includes Institute Cargo Clause (A) and Institute Strike Clauses
Secure payment through an irrvocable documentary credit confirmed by you.
Any of the above
9. ABC Co. has entered into a contract with XYZ Ltd to ship Iron Ore from Chennai to Busan.
The incoterms specified in the contract is CFR Busan. ABC Cos mine I located 100kms.
Which of the following statement correctly reflects the risks & responsibilities of ABC Co & XYZ Ltd/

a)
b)
c)
d)

Risk of loss / damage to the goods after they are loaded on the trucks is for XYZ Ltds account
Risk of loss / damage to the goods till the vessel reaches Busan is for ABC Cos account
Risk of loss / damage to the goods while they are being unloaded in Busan is for the account of XYZ Ltd
ABC Co is responsible for arranging the vessel if the shipment is to be effected by charter party

10. Your customer has entered into a contract with an overseas buyer to ship goods on CPT basis.
Shipment will be made for the customers welfare to port by trucks and from the port to buyers country by sea.
Your ustomer will be using two different carriers (one for road and another for sea) to effect the shipment. Which of the following are statements is TRUE?
a)
Your customer must pay the freight charges of first carrier only
b)
Your customer must pay the freight charges of both the carriers
c)
Risk of loss / damage during voyage is transferred to the buyer, when your customer deliveries the goods to the first carrier
d) Risk of loss / damage during voyage is transferred to the buyer when the goods are delivered to the second carrier by the first carrier
(1)
(2)
(3)
(4)

A&C
B&C
A&D
B&D.

11.Which of the following statements is TRUE regarding incoterms?

A.
B.
C.
D.

Seller is not responsible for unloading in DEQ

DAF is suitable only for overland transportation
Seller should arrange for maximum possible insurance cover in CIF
DDP is not suitable for transportation by sea

12.Company A (in country X) agrees to sell grade no. 2 Agrentine yellow corn to company B (in country Y) on CFR basis.
Company A charters a vessel to ship goods from country X to country Z.
However, before the payment is settled the companies enter into a dispute regarding the quality of corn shipped.
The sales contract between the companies specifies that in case a dispute law of the country where the goods are to be delivered will apply.
Which countrys law is more likely to be applied
A.
B.
C.
D.

Country X
Country Y
Country Z
Any of the above

13. Great Exporters Ltd, India enters into a contract with Food Imports S.A France to sell Basmati rice.
The contract is signed under FAS terms. However, the contract does not specify any detail on who is responsible for obtaining export clearance and
packing the goods. Which of the following statements is true?
A.
B.
C.
D.

Great exporters ltd is responsible to obtain export clearance

Great Exporters Ltd is not responsible for packing as it is not stated in the contract
Food imports SA is responsible for export clearance
Great Exporters Ltd is responsible for packing the goods if it is customary to do so

14. Match the following

a)
b)
c)
d)

DEQ
DDU
CFR
DES

-Transfer of risks at port of discharge

-Unloading cost borne by seller
-Import clearance by buyer
-Transfer of risk at port of loading

DABC

15. Your customer has approached a manufacture to buy 1000 pairs of shoes, the various prices quoted by the manufacture are as follows
EXW 10000
FOB 10500
CIF 11500
DDP 13000
16. Your customer has checked independently and received the following quotes for the same shipment they are :
All licensing and loading costs ( in exporting country ) USD 500
Main Carriage cost USD 1000
Minimum insurance cover USD 500
Unloading costs, inland transport ( in importers country ) and import
duties USD 1500
What quote of the exporter your customer should accept?
a)
b)
c)
d)

EXW
FOB
CIF
DDP

16)Which of the following incoterms is correctly described?

Incoterms
DDP
CFR

Insurance Doc.
Required
Required

Transport Doc.
Marked Freight Paid
Marked Freight Collect

FOB
FAS

Not required
Not required

Marked Freight paid

Marked Freight Collect

Test : CDCS/3

1. Which of the following is not suitable for when FCA term is used?
a)
b)
c)
d)

on board bill of lading

tax invoice
forwarders cargo receipt
packing list

2.

Which of the following statements about bills of exchange are correct

a)
b)
c)
d)

they are used as instruments to extend long term credit

they are used as a security for payment
they are used as instruments to extend short term credit
they are used only in international trade

1.
2.
3.
4.

A& B
B&C
C&D
A& D

3.

Which of the following is NOT true about holder in due course

a)
b)
c)
d)

their
rights
are
affected
by
contract
they acquire their right to claim payment through endorsement and delivery
they must have taken the instrument in good faith
they must have taken the instrument without knowledge of any defects in title

5.

Which party has the MOST responsibility to examine the terms and conditions of a documentary credit against the sales agreement?

A.
B.
C.
D.

Applicant
Beneficiary
Issuing bank
Confirming bank

6.

A documentary credit is a irrevocable undertaking

a)
b)
c)
d)

enforceable against a reimbursing bank even if issuing bank is unable to pay

enforceable against the applicant even if issuing bank is unwilling to pay
enforceable,against,the,nominated,bank,evenif,issuing,bank,is unwilling to pay
enforceable,against,the,issuing,bank,even,if,the,confirming,bank,is unwilling to pay

7.

An,employee,of,a,nominated,bank,making,payment,to,a beneficiary under a documentary credit should be aware

a)The,extent,to,which,their,bank,has,agreed,to,act,in,its,role,of nominated bank
b) An indemnity has been provided, if the presentation is discrepant
c) Whether the beneficiary has a separate negotiation facility
d) Whether any shipment guarantee have been issued under the credit

a.
b.
c.
d.

A&B
A&C
A,C&D
A,B&C

8.

Which documentary credit enables a beneficiary to obtain pre-shipment financing without impacting his facility?

A.
B.
C.
D.

Transferable
Red Clause
Irrevocable, payable at sight
Confirmed irrevocable, payable at maturity

9. A Marine bill of lading acts as:

1. An acknowledgement of receipt of the goods by the carrier
2. Evidence of a contract of carriage
3. A document of title for the goods
4. Evidence of the contract between the seller and forwarding agent ?
a)
b)
c)
d)

1 and 3 only
2 and 4 only
1,2 and 3 only
2,3 and 4 only

disputes

in

rights

and

wrongs

of

the

commercial

10. A beneficiary receives an irrevocable documentary credit for which USD 22,500 may be drawn during each month of the documentary
Credits one year validity. The documentary credit also indicates that reinstatement is on a cumulative basis. Full monthly drawings
Were made during the first, second, fourth, fifth and seventh months and there have been no other drawings.
In the last month of the documentary credits validity, the beneficiary expects to make a final shipment.
What is the maximum value available for this final drawing?
A.
B.
C.
D.

USD 112,500
USD 135,000
USD 157,500
USD 180,000

11. If an exporter is willing to release the shipping documents directly to the buyer, but wishes to retain some guarantee of payment, should the buyer fail to pay on the due date, which of the following
documentary credits BEST suits the exporters needs?
A.
B.
C.
D.

Transferable
Revolving
Standby
Evergreen

12. Select the most appropriate statement

a.
b.
c.
d.

The issuing bank must use an advising bank

The issuing bank may use an advising bank
There must be at least two banks in a L/C operations
None

13.
In the case of a non-cumulative revolving documentary credit available forUSD 10,000 per month and
valid
or
six
months,
which
is correct?
1.
2.
3.
4.

The face value of the credit is USD 10,000

The face value of the credit is USD 60,000
The amount(s) not utilized in one month may be carried over to the next
The total undertaking of the issuing bank is USD 60,000

A.
B.
C.
D.

1 and 3 only
1 and 4 only
2 and 3 only
2 and 4 only

of

the

following

statements

14. A cumulative revolving documentary credit is opened with six months' validity and allowing for USD 25,000.00 to be drawn each month. If only the first month's shipment is effected in full, what is
the available amount in the fourth month?
A.
B.
C.
D.

USD 0.00.
USD 25,000.00.
USD 75,000.00.
USD 100,000.00

15.

Applicant in his instructions to issue a documentary credit should specify

a)
b)
c)
d)

Terms and conditions which the beneficiary has to comply with to obtain payment under the sales contract
Terms and conditions which the beneficiary has to comply with to obtain payment under the documentary credit
Documents to be produced to obtain payment under the documentary credit
All the relevant terms and conditions of the sales contract

1.
2.
3.
4.

A& D
B&C
B, C & D
B&D

Test: CDCS/4
1. On 03 January XXXX an irrevocable documentary credit for USD 500,000.00 is confirmed. On 17 January XXXX the confirming bank receives an amendment
cancelling the documentary credit which it advises to the beneficiary. As at 18 January XXXX, what is the liability of both banks?
A Issuing and confirming bank USD 0.00.
B Issuing and confirming bank USD 500,000.00.
C Issuing bank USD 0.00 Confirming bank USD 500,000.00.
D Issuing bank USD 500,000.00 Confirming bank USD 0.00.
2. In revolving credits where reinstatement is dependent on value, which of the following controls of operations risk are required?
a)
Restrict negotiation to a nominated bank
b)
Restrict the overall drawing value
c)
Restrict the individual shipment/drawing value
d)
All of the above
3. Bill of exchange is required in case of following
a)
b)
c)
d)

Documents against payment

Documents against acceptance
When L/C is available by acceptance
B&C

4. Freely available credit means

a)
Credit issued without collecting any charges from the applicant
b)
Credit available with nominated bank and issuing bank
c)
Credit available with any bank
d)
None of the above
5.
A.
B.
C.
D.
1.
2.
3.
4.

In a freely available L/C, which of the following statements is true?

Documents must be presented to the advising bank only
Documents can be presented to any bank and it is obliged to negotiate
Documents can be presented to any bank and it is not obliged to negotiate
Documents can be presented directly to the issuing bank
A only
A& D
B&D
C&D

6. A sea way bill is a non negotiable document, but is it a document of title?

a.
Yes
b.
No
7. A cumulative revolving L/C is issued for USD 10000; the L/C value is reinstated upon every drawing. The L/C is valid for a period of one year. What is the maximum liability of the issuing bank?
a.
b.
c.
d.

USD 10000
USD 120000
USD 360000
Cannot be determined

8. When an advising bank adds its confirmation to a documentary credit, which of the following risks has the beneficiary mitigated?
1.
Issuing Bank
2.
Foreign Exchange
3.
Political
4.
Fraud
A.
B.
C.
D.

1 and 3 only
1 and 4 only
2 and 3 only
2 and 4 only

9. Bank A issues a letter of credit and nominates Bank B as the negotiating bank. When does Bank B assume the credit risk of Bank A?
1.
2.
3.
4.

When bank B add confirmation to the L/C

When bank B negotiates compliant documents under the unconfirmed L/C
When bank A issues the L/C nominating bank B as the negotiating bank
When the bank B forwards compliant documents to Bank A without

a.
b.
c.
d.

1 only
1&2
3 only
3&4

negotiating

10. A documentary credit which allows partial shipments has the following shipment schedule:
1,000 units to be shipped between 01 June XXXX and 30 June XXXX
2,000 units to be shipped between 01 July XXXX and 31 July XXXX
2,000 units to be shipped between 01 August XXXX and 31 August XXXX
3,000 units to be shipped between 01 September XXXX and 30 September XXXX

The beneficiary shipped the goods and presented documents as follows:

1. 1,000 units shipped on 15 June XXXX documents presented on 30 June XXXX
2. 3,000 units shipped on 15 July XXXX and presented on 28 July XXXX
3. 2,000 units shipped on 31 July XXXX and presented on 15 August XXXX
4. 3,000 units shipped on 15 September XXXX and presented on 30 September XXXX
Which of the above sets of documents are complying?
A 1 only.
B 3 only.
C 1 and 4 only.
D 1, 2 and 4 only.

CDCS/5

1. Letter of credit issued by the issuing bank does not expressly states that it is subject to UCP 600 rules
a) Advising bank may advise the same to the beneficiary after authentication
b) Advising bank should ignore L/C received
c) Advising bank may advise the credit to beneficiary after authentication and may seek clarification from the issuing bank
d) A or C
2. UCP 600 uses terms like "banks", "banking days" and "international standard banking practice".
Would this imply that UCP 600 couldn't be applicable to credits issued by non-banks?
a) Yes
b) No
3. Are domestic letters of credit covered under the UCP rules or not ?
a) Yes
b) No
4. If letter of credit is silent about applicable rules, which rules will apply?
a) Latest version of UCP 600
b) UCP 500
c) Not subject ICC rules
5. Can a non-bank can issue a letter of credit subject ICC rules under UCP 600 ?
a) Yes
b) No
6. We issued letter of credit by SWIFT before 1st of July 2007 stating that it is subject to UCP LATEST VERSION. When we receive documents under this credit after July 1 st 2007, which
version of UCP will the credit be subject UCP 500 or UCP 600 ?
a) UCP 500
b) UCP 600
c) Seek clarification from applicant

7. An issuing bank becomes bound by the terms of an amendment to a documentary credit at the time at which the:
a) Beneficiary accepts the amendment whether expressly or by implication
b) Reimbursing bank agrees to the applicants request for an amendment
c) Advising bank advises the amendment to the beneficiary
d) Issuing bank issues the amendment to the advising bank
8. Letter of credit issued on 20th December 2008 indicates latest of date of shipment as: immediate. L/C expiry date is 30th April 2009 and period for presentation is 15 days
a) Beneficiary must ship the goods on or before 30th April 2009
b) Beneficiary must ship the goods on or before 15th April 2009
c) Beneficiary must effect shipment within 21 days
d) Beneficiary must effect shipment within a 5 banking days
9. L/C requires presentation of certificate of origin issued by local chamber of commerce.
a) Certificate of origin must show title as certificate of origin issued by Local chamber of commerce and must evidence certificate of origin issued by
Chamber of commerce at beneficiarys place
b) Certificate of origin may show title as certificate of origin but must evidence the such certificate is issued by a chamber of commerce at place of
Dispatch/taking in charge/shipment
c) Certificate of origin presented need not be titled but must be issued by chamber of commerce of the same country
d) All above are incorrect
10. L/C requires shipment advice must be sent to applicant as soon as possible after shipment and beneficiary certificate to this effect to be presented
a) Beneficiary sent shipment advise within 5 banking days upon shipment and certificate presented to this effect
b) Beneficiary sent shipment advise within 10 days but certificate presented evidences that shipment advise has been sent as soon as possible
c) Beneficiary sent shipment advise on the same day of shipment and certified that shipment advise has been sent on the same day
d) All above are incorrect
11. As per L/C dated 1st Dec 2008, shipment to be effected between 10th of Dec 2008 and 20th of Dec 2008.
a) Beneficiary must effect shipment on or before 20th Dec 2008
b) Shipment effected any day between 11th of Dec to 20th of Dec acceptable
c) Shipment effected any day between 10th of Dec to 20th of Dec acceptable
d) Only A is incorrect

12. L/C requires shipment to be effected On or about 25th of Dec 2008. 25th Dec 2008 is closed due to Christmas in beneficiarys country.
a) Shipment effected between 21st Dec and 30st Dec acceptable
b) Shipment effected between 20th Dec and 31st Dec acceptable
c) Shipment effected on 25th Dec is acceptable
d) A & C correct
13. Prior to advising a documentary credit to the beneficiary, the advising bank is responsible for:
a) Effecting payment against conforming documents
b) Checking the apparent authenticity of the documentary credit
c) Notifying the issuing bank that the documentary credit is being advised
d) Checking that the reimbursement method is effective?
14. A documentary credit states that shipment must be made on or about 27th June. Which of the following shipment dates would be acceptable?
1) 20th June
2) 27th June
3) 02nd July
4) 03rd July

a) 1 and 2 only
b) 1 and 4 only
c) 2 and 3 only
d) 3 and 4 only
15. Latest date of shipment as per L/C is: by end of Dec 2008.
a) Shipment only to be effected between 21st Dec and 31st Dec
b) Shipment only to be effected between 20th Dec and 31st Dec
c) Shipment may be effected on or before 31st Dec 2008
d) Shipment only to be effected 25th Dec to 31st Dec 2008

16. as per L/C issued on 12th Feb 2009, latest date of shipment was On or about 15th March 2009. Which of the following is the shipment under the L/C ?
a) 10th to 20th of Mar 2009
b) 11th to 19th of Mar 2009
c) Any time before 15th of March 2009
d) None of the above correct

17. Which of the following is correct option for the second half of Feb 2008
a) 16th to 28th Feb
b) 15th to 28th Feb
c) 11th to 20th Feb
d) 16th to 29th Feb

18. If an L/C states shipment to be effected on or about 06 March, it will mean shipment to be effected between
a) 01st March 11th March
b) 01st March 10th March
c) 02 March 11th March
d) Any time on or before 06 March
19. Which of the following statement is true?
a) If an L/C states shipment to be effected on the first half of March it will mean Ist -16th of the March
b) If an L/C states shipment to be effected at the end of March, it will mean 20 th to 31st March
c) If an L/C states shipment to be effected in the middle of March, it will mean 11th to 20th of March
d) All of the above
20. For instalment shipment, L/C says, there must be 20 days difference between two shipments. Which of the following comply:
a) Ist shipment on 1st Jan & 2nd shipment 21st Jan
b) Ist shipment on 1st Jan & 2nd shipment 19th Jan
c) Ist shipment on 1st Jan & 2nd shipment 20th Jan
d) None of above

21. Applicant of the credit, require including copy of proforma invoice as an integral part of the credit.
a) Issuing may include the same as required by the credit without any hesitation
b) Issuing may should discourage applicant but may include if applicant insist for the same
c) Issuing bank should refuse to include proforma invoice as an integral part of the credit
d) Only C above is correct

22. A confirming bank has advised an amendment but remained silent about confirmation status of that particular amendment.
What can be inferred from such action of the confirming bank?
a) The amendment is confirmed
b) The amendment is not confirmed
c) Beneficiary must seek clarification from the confirming bank
d) None
23. Can a name of the applicant be changed after it has been issued through amendment
a) Yes
b) No

24. If a letter of credit calls for an invoice to be certified by chamber of commerce

a) Invoice should bear the stamp of chamber of commerce
b) Invoice should be signed by chamber of commerce
c) Invoice should have a label of chamber of commerce
d) Any of the above will suffice
25. A documentary credit states shipment should be made on or about 10thMar 09. Which of the following shipment dates are NOT ACCEPTABLE?
a) 04 Mar 09
b) 07 Mar 09
c) 14 Mar 09
d) 10 Mar 09

CDCS/6
1.On 18th Mar 08, bank A receives documents from its export customer under a documentary credit issued by Bank I,
with following details # Issue date 01 Mar 08 # Valid till 21 Mar 08
Available by acceptance with drafts drawn on Bank B at 30 days from BL date
1.

Which of the following statement is true?

A.
B.
C.
D.

The documents must reach bank B by 21st March, if documents are to be sent to the nominated bank
The documents can be directly dispatched to bank I on 22nd March
If documents are to be sent directly to bank I, then drafts can be drawn on Bank I
If documents are to be sent directly to Bank I, then drafts can be drawn on Bank A

a)
b)
c)
d)

A& B
A&C
B&C
B&D

2.

Which of the following statement is true?

A.
B.
C.
D.

Unless otherwise stipulated in the credit, shipment can be effected prior to the issue of the credit
Unless otherwise stipulated in the credit, invoice cannot be dated prior to the issue of the credit
Unless otherwise stipulated in the credit, all documents can be dated prior to the issue of the credit but shipment must be effected on or after the issue date
Unless otherwise stipulated in the credit, banks will accept documents dated after the expiry date of the credit
3.

Your customer presents documents under an L/C, which states the shipment to be effected in the second half of Feb. Which of the following statement is true?

A.
B.
C.
D.

Marine BL showing shipment date as 14th Feb

A railway bill showing shipment date as dated 15th Feb
An Airway bill showing shipment date as 16th Feb
Such notations in L/C are not acceptable and will be ignored.

4.

Pre-advise credit is an irrevocable undertaking

A.
B.
C.
D.

To be irrevocable, operative credit must be issued

True
False
Pre-advise is not acceptable in UCP

5.

As per 13 of UCP 600, a nominated bank can also termed as

A.
B.
C.
D.

Advising Bank
Transferring Bank
Issuing Bank
Claiming Bank

6.

A documentary credit pre-advice is issued on 1 March for USD 510,000.00 with the following terms and conditions:
- Part shipment allowed.
- Latest shipment date 30 April.
- Expiry date 15 May.
On 2 March the applicant requests an amendment prohibiting part shipment and
600 what MUST the issuing bank do?

A.
B.
C.
D.

extending the expiry date to 30 May. In accordance with UCP

Clarify with the applicant the period for presentation.

Issue the documentary credit as originally instructed.
Issue the documentary credit incorporating all the amendments.
Issue the documentary credit incorporating only the extended expiry date.

7.
Bank I issued an L/C available with Bank X and sated the reimbursing bank as Bank R. On the same day, it sent a revocable reimbursement authorisation to
Bank R stating that Upon receipt of claim from Bank Y you are authorised to reimburse them after 3 working days notification to us.
Bank I however did not state this requirement in the L/C. Due to which reimbursement to Bank X was delayed. Which of the following statements is true?
A.
B.
C.
D.

Bank I is liable to compensate Bank X for loss of interest.

Bank R is liable to compensate the bank X as it has delayed the payment
Bank I is liable to compensate Bank X, however it can recover the charge from the applicant since it is acting according to their instructions
No bank is responsible for the delay

8.

The issuing bank wants to cancel the L/C before it has been advised to the beneficiary by the advising bank. What are the options available to issuing bank

A.
B.
C.
D.

ISB may cancel the L/C at any time

ISB must seek permission from the advising bank before cancelling
ISB must call back the L/C from advising bank and then cancel the L/C
ISB must obtain consent of the beneficiary

9.

Bank that can honor & negotiate complying presentation

A.
B.
C.
D.

Issuing bank
Nominated bank
Confirming bank
B&C

10. Bank that can negotiate complying presentation

A.
B.
C.
D.

Issuing bank
Nominated bank
Confirming bank
B&C

11. Bank that can honor complying presentation

A.
B.
C.
D.

Issuing bank
Nominated bank
Confirming bank
All above

12. 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.
B.
C.
D.

1 and 2 only.
1 and 3 only.
2 and 3 only.
3 and 4 only.

13. Letter of credit issued on 20th December 2008 indicates latest of date of shipment as : immediate. L/C expiry date is 30th April 2009 and period for presentation
is 15 days
A.
B.
C.
D.

Beneficiary must ship the goods on or before 30th April 2009

Beneficiary must ship the goods on or before 15th April 2009
Beneficiary must effect shipment within 21 days
Beneficiary must effect shipment within a 5 banking days

14. If an advising bank is authorised or requested by issuing bank to add its confirmation to a credit
A.
B.
C.
D.

It should definitely add its confirmation

It need not add its confirmation but it should inform the issuing bank that it is not Adding confirmation.
It can not advise the credit if it is not conforming the credit
If can negotiate documents under the credit, only if it adds its confirmation

15. Within what period, beneficiary must confirm acceptance of L/C amendment
A.
B.
C.
D.

Within 5 banking days

Immediately
Within 5 calendar days
Not necessarily to confirm acceptance

16. If amendment SPECIFIES that beneficiary must confirm acceptance of amendment within certain period
A. Beneficiary must comply this requirement without fail within period stipulated by the amendment.
B.
Beneficiary may or may not comply this requirement
C.
Beneficiary may contact applicant directly and seek further amendment for deletion of this requirement
D. Beneficiary must inform advising bank that they are unable to decide acceptance/rejection of amendment if undecided
17. If a nominated bank refuses to honor or negotiate a presentation, that bank is no more a nominated bank.
A. True
B. False
C. Nominated bank must negotiate
D. None
18. Which of the following statement is most appropriate as per UCP600
A.
B.
C.
D.

A credit must not be issued available by drafts drawn on the applicant.

A credit may not be issued available by drafts drawn on the applicant
A credit may be issued available by drafts drawn on the applicant.
None of above

19. Which of the following is necessary to amend the L/C

A.
B.
C.
D.

Agreement of the issuing bank, confirming bank and applicant.

Agreement of the issuing bank, advising bank and beneficiary
Agreement of the issuing bank, confirming bank and beneficiary
B & C above

20. A letter of credit calls for a bill of exchange showing tenor as 60 days from the date of shipment. If the shipment is effected on 1 st Jan 2008, what would be maturity date?
A.
B.
C.
D.

28th Feb 2008

1st Mar 2008
2nd Mar 2008
3rd Mar 2008

21. As per usance L/C, issuing bank undertakes to effect payment at 90 days from the shipment date. Date of shipment is 1st of Dec 2008. 2nd of Dec is holiday in both beneficiarys and applicants country
due to Sunday
A.
B.
C.
D.

90 calendar days to be calculated from 1st of Dec 2008

90 calendar days to be calculated from 2nd of Dec 2008
90 banking days to be calculated from 3rd of Dec 2008
90 banking days to be calculated from 2rd of Dec 2008

22. When L/C is silent about period for presentation and requires no original transport documents
A.
B.
C.
D.

Documents must be presented in 21 calendar days

Documents must be presented within 21 banking days
Documents must be presented on or before of expiry of the credit
None of the above

23. A documentary credit is issued for an amount of GBP 60,000.00 and calls for drafts to be drawn at 30 days from bill of lading date. Documents have been presented
with a bill of lading dated 09 November XXXX. Which of the following tenors on the draft will NOT be acceptable?
A.
B.
C.
D.

09 December XXXX.
30 days from bill of lading date.
30 days after 09 November XXXX.
30 days date, draft dated 09 November XXXX.

24. L/C was originally issued for value USD 10,000. Later it was reduced to USD 5,000 by an amendment. The beneficiary presented documents for USD 5,000.
To understand whether beneficiary has accepted amendment or not, which of the following is most relevant question
A.
B.
C.
D.

Was partial shipment allowed in the credit ?

Did advising bank notify the issuing bank ?
Both
None

CDCS SAMPLE TEST 7/25 With Answers

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 01 st 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 banks sight of the documents
or the issuing banks 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? NO

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)

and

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 15 th 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 applicants acceptance
18. Last date for presentation of documents in beneficiarys 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? NO

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--NO

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? YES
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? YES
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."
YES
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?--NO
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?--YES

CDCS/8
1.
The applicant showed to the beneficiary a written undertaking from the issuing bank for its agreement to issue a letter of credit subject to UCP 600.
However, due to change in financial position of the applicant, the issuing bank later decided not to do so. The beneficiary wrote to the issuing bank to force its commitment in writing.
Is the beneficiary successful?---No
2. Under which condition that a confirmed letter of credit subject to UCP 600 may become unconfirmed without the consent of the beneficiary?
IF CONFIRMING BANK ADVISES THE AMENDMENT WITHOUT ADDING CONFIRMATION
3. An issuing bank sent its refusal notice to a presentation under UCP 600 to a presenting bank overseas by courier.
Is this acceptable?--YES
3.
A documentary credit is issued for an amount of approximately GBP 40,000.00 payable with drafts drawn at 30 days from date of shipment.
Documents are presented on 22 September XXXX with bills of lading dated 01 September xxxx and for value GBP 38,000.00.
Which of the following drafts would be accepted?
1. 30 days from 01 September XXXX for approximately GBP 40,000.00.
2. 30 days from date of shipment value GBP 38,000.00.
3. Due 01 October XXXX value GBP 38,000.00.
4. 30 days from bill of lading date 01 September XXXX value GBP 38,000.00.
a) 1 and 2 only.
b) 1 and 3 only.
c) 2 and 4 only.
d) 3 and 4 only.
5. Which of the 'additional conditions' are deemed to be non-documentary?
1. Beneficiary must provide the applicant with details of the shipment.
2. Shipment must be made on a vessel named Butterfly.
3. Goods must be inspected by the applicant prior to shipment.
4. Goods must be of Indian or Chinese origin.
a) 1 and 2 only.
b) 1 and 3 only.
c) 2 and 4 only.
d) 3 and 4 only.

6. A L/C was issued by 60 days deferred payment from the date of bill of lading. The presented document shows the BL date as 30 th Sep 2008 while the document was received by the issuing
bank on 5th Oct 2008. The issuing bank raised discrepancy on 10 th of Oct 2008. The document was later accepted by the applicant on 15 th Oct 2008. The issuing bank communicated its
acceptance on 16th Oct 2008.
Which one of the following is the correct maturity date of the bill?

a) 29th Nov 2008

b) 4th Dec 2008
c) 14th Dec 2008
d) 15th Dec 2008
7. Is this refusal notice acceptable for a DC subject to UCP 600?
"We refuse to pay you due to the following three discrepancies:
1. The commercial invoice does not meet the terms and conditions of the DC.
2. Third party B/L presented.
3. Unclean B/L presented.
Meanwhile we are holding the documents at your disposal and risk."
8. A presenting bank had the following messages in its covering letter/schedule dated 24 July 2007 presented against a DC subject to UCP 600.
"We have found the following discrepancies in the 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.
The documents are now presented for collection. Please approach the applicant for a waiver and give us your authority to negotiate by SWIFT message."
The issuing bank sent its refusal notice as follows:
"After consulting the applicant, we determine to refuse the documents due to the three discrepancies with the underlying reasons as stipulated in your covering letter/schedule dated 24 July 2007.
Meanwhile, we are holding the documents at your disposal and risk."
Who is wrong in this case- issuing bank or nominated bank ?

9. An issuing bank sent its refusal notice on the 5th banking day after receipt of the documents presented under UCP 600. In fact a simple set of documents was presented for sales of
kitchenware, consisting of a total of 12 pages of documents.
Is this refusal notice sent within reasonable time?
10. Under UCP 600, can a beneficiary, through a presenting bank, have the right to present documents against a confirmed letter of credit directly to the issuing bank?

11. 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?
12. Your customer has received the following amendment under L/C which prohibits partial shipments
1. Decrease in amount of L/C from USD 100000 to USD 90000
2. Inspection certificate from SGS instead of Ministry of Agriculture
What options does your customer have in terms of documents presentation?
a) Reject the amendment in writing, if not it will be assumed that he has
accepted the amendments
b) Present documents for USD 100000 and inspection certificate from SGS
c) Present documents for USD 90000 and inspection certificate from Ministry of
Agriculture
d) Present documents for USD 100000 and inspection certificate from Ministry of
agriculture
13. An advising bank acts as per UCP
a) If it refuses to add confirmation to a documentary credit upon request from the
issuing bank but still advises the credit to the beneficiary
b) If it passes an incomplete documentary credit to the beneficiary without
mentioning the fact that the credit appeared incomplete
c) If it takes no action upon receipt of an incomplete documentary credit,
assuming that the issuing bank will provide all necessary information later
d) If it treats mail confirmation as the LC while it has received by LC through both
through tele transmission and mail

14. 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?
15. 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?
16. You receive an L/C with the following condition
Beneficiary ABC Co, Taiwan
Manufacturer-XYZ Co, China
Certificate of origin issued by local chamber of commerce
Export License issued by a official authority in the exporting country
Beneficiary presents the following documents
1. Certificate of origin issued by a chamber of commerce in Hong Kong
2. Export license issued by XYZ Co in China
a) Both documents are not acceptable
b) Both documents are acceptable
c) 1 is acceptable but 2 is not
d) 2 is acceptable but 1 is not

17. When advice of refusal states 5 discrepancies and nominated bank observe 3 of them are not valid, is the advice of refusal valid ?
18. In a confirmed credit, if the drafts are drawn on the confirming bank, can the confirming bank negotiate ?
19. A credit stipulated under additional conditions, shipment to be effected on FCL/FCL basis. Is it necessary for the bill of lading to indicate shipment effected on FCL/FCL basis?
20. An issuing bank has issued a sight documentary credit to a beneficiary authorising a nominated bank to pay the beneficiary for all documents presented in accordance with the documentary credit
terms and conditions. Upon receipt of complying documents drawn under the documentary credit direct from the beneficiary, the issuing bank should:
a) Examine the documents and pay the beneficiary
b) Verify the documents and pay the nominated bank
c) Return the documents to the beneficiary for presentation to the nominated bank
d) Remit the documents to the nominated bank for examination
21. A confirming bank examines documents under a documentary credit, which requires presentation of an invoice, certificate of origin and an ocean bill of lading.
The documentary credit also includes the following clause: special condition- all packages must be clearly marked with the country of origin.
Where the documents do NOT show that the packages have been marked in this way and are otherwise in order, the confirming bank should:
a) Reject the documents and suggest to the beneficiary that he present a
certificate evidencing that this condition has been complied with
b) Reject the documents and suggest to the beneficiary that the certificate of
origin be amended to include the special condition
c) Contact the issuing bank and withhold payment until clarification is received
d) Ignore the special condition and honour the beneficiarys presentation of
documents

22. An LC subject to UCP 600 was issued on 1 August 2007 stating the total value of the goods as "USD 200,000 CIF Hong Kong" and a commercial invoice stating "USD 200,000 CIF Hong Kong
Incoterms 2000" was presented.
The Issuing Bank considered this as a discrepancy.
The reasons are:
"CIF" does not exist only in Incoterms. It is also found in other trade terms, such as the USA Trade Definitions, the Warsaw Trade Terms and the like. The Applicant may not mean Incoterms.
Even if the parties do mean Incoterms, it may be Incoterms 1990 other than Incoterms 2000.
Is the Issuing Bank correct in its determination of this discrepancy?
23. Documents under a documentary credit are tendered at the counters of the confirming bank and are mistakenly found to comply with its terms and conditions. The confirming bank pay the
beneficiary and forwards the documents to the issuing bank. Upon receipt by the issuing bank, the documents are checked and found to be discrepant. The issuing bank notifies the confirming bank of all
discrepancies ten banking days after receipt and refuses to reimburse. In considering whether the confirming bank can recover funds paid, which of the following statements are correct? It:
1) Can recover from the beneficiary
2) Cannot recover from the beneficiary
3) Can recover from the issuing bank
4) Cannot recover from the issuing bank
a) 1 and 3 only
b) 1 and 4 only
c) 2 and 3 only
d) 2 and 4 only
24. A credit was issued by ABC Bank Ltd on 1 st of Oct 2008 and was confirmed by XYZ Bank Limited. The credit was 30 days after sight available with confirming bank by acceptance. On
presentation of documents by the beneficiary on 1 st Nov 2008 to the confirming bank, the confirming bank communicated its acceptance to the beneficiary on the same day and forwarded the documents
to the issuing bank. The issuing bank communicated its acceptance on 5 th Nov 2008. What is correct maturity under this presentation?
a) 31st Oct 2008
b) 1st Dec 2008
c) 5th Dec 2008
d) None of the above
25. L/C is available by sight payment with issuing bank and requires presentation of documents within 21 calendar days from the date of shipment
a) Beneficiary must present documents to their banker within 21 calendar days
from the date of shipment without fail but within the validity of the credit
b) Beneficiary or their banker must dispatch documents within 21 calendar days
from the date of shipment but not later than expiry of the credit
c) Beneficiary must present documents to their banker before expiry of the credit
d) None of above

ANSWERS

1.

NO

2.

IF CONFIRMING BANK ADVISES THE AMENDMENT WITHOUT ADDING CONFIRMATION

3.

YES

4.

5.

6.

7.

NOT VALID

8.

ISSUING BANK

9.

YES

10.

YES

11.

NO

12.

13.

14.

NO

15.

NO

16.

17.

YES

18.

NO

19.

NO

20.

21.

22.

NO

23.

24.

25.

CDCS/9
Which of the following documents MUST be signed?
a) Packing list.
b) Certificate of origin.
c) Commercial invoice.
d) Weight specification.
2. You customer has presented documents under a freely negotiable irrevocable letter of credit. Upon examination of documents,
you find that the description of goods in the invoice is not as per L/C. However, your customer wants to be paid before the documents
are dispatched to the issuing bank. Which of the following options do you have as a nominated bank?

A) Return the documents to the beneficiary for correction

B) Send message to the issuing bank for permission to negotiate despite the discrepancy
C) Send message to the applicant for permission to negotiate despite the discrepancy
D) Request the beneficiary to obtain an amendment from the issuing bank changing the description of goods
a) A & B
b) A, B & C
c) A, B & D
d) All of the above
3. Bank A receives documents from the nominated bank under a letter of credit issued by it. The nominated banks schedule states that
they have negotiated documents under reserve due to discrepancies. The schedule also lists down the discrepancies. Which of the following statements is true?
a) Bank A must reimburse the nominated bank since they have negotiated documents
b) Bank A is not required to send a notice of refusal
c) Bank A is required to send a notice of refusal, only if it finds discrepancies other than the ones mentioned in the nominated banks schedule
d) Bank A may choose to waive the discrepancies mentioned in the schedule and reimburse the nominated bank
4. Your bank had issued an irrevocable documentary credit which expires on March 20 th and is available with and confirmed by bank N.
Beneficiary makes compliant presentation to bank N on March 20th. The presentation is not honored by Bank N. The beneficiary then sends the documents
directly to you on March 25th for payment. Which of the following correctly reflects your position?
a) You are not liable to pay the beneficiary as documents were not received by you within the expiry date of the L/C
b) You should urge bank N to pay the beneficiary, since they have added confirmation and then reimburse bank N
c) You should return the documents to the beneficiary and request them to send the documents through another bank
d) You should pay the beneficiary
5. Which of the following statements is false:
a) In case of non-confirming documents, there is no liability for the nominated bank to pay beneficiary
b) Payment made by issuing bank to beneficiary is without recourse
c) Payment made by issuing bank to confirming bank is without recourse
d) Payment made by nominated bank to beneficiary is without recourse
6. L/C stipulates that credit would only be honored at the counters of the issuing bank. The advising bank receives documents what should it do?
a) Examine documents and inform beneficiary of any discrepancies found
b) Examine documents and pass it on to the issuing bank
c) Forward documents directly to the issuing bank without any document checking
d) Ask beneficiary to route the documents through any other bank
7. Bank Good Hope negotiates a set of documents presented by its customer and forwards it to the issuing bank. Issuing bank accepts the documents
and forwards them to the applicant. Applicant finds that the certificate of analysis does not conform to the L/C and insist that the issuing bank
refund the money debited from its account. Who is responsible?
a) Negotiating bank
b) Beneficiary
c) Issuing bank
d) Applicant is not allowed to check documents
8. Where a presentation has been made by a beneficiary to his bank. Which of the following statement is most suitable?
a) Notice of refusal need not be given
b) Notice of refusal must be given by telecommunication only
c) Oral notice of refusal may be given if the beneficiary is in discussion with the document checker at the counters of the bank
d) Oral notice of refusal may not be given even is the beneficiary is in discussion with the document checker at the counters of the bank as it is not allowed by UCP 600.
9. Which of the following statements are true while handling pending dishonoured documents
A) The documents are held at the disposal of the applicant
B) The documents securely stored
C) The presenter needs to be informed at regular intervals
D) The presenter need not be informed at regular intervals
a) A&B
b) A&C
c) B&C
d) B&D
10. Bank I receives documents under a L/C it has issued on 6th March. Bank finds the documents to be discrepant.
Which of the following notice of refusal sent by Bank I is valid? 7th March is Friday, Bank I does not work on Saturdays and Sundays ,
there are no bank holidays in March
a) A message sent on 13th March by tele transmission stating we received your documents presented under our L/C. However we refuse to pay as the documents are discrepant. Meanwhile we are
holding documents at your disposal
b) message sent on 12th March by tele transmission stating We refuse your presentation as the documents contain the following discrepancies
Late Shipment, partial shipment. We are returning the documents to by courier

c) A message was sent on 10 th March through tele transmission stating We refuse payment as the documents contain the discrepancy late shipment. We will effect payment when documents are
accepted by the applicant
d) A message was sent on 16 th March through tele transmission ststing We refuse payment as the documents contain the discrepancy late shipment. We are holding documents pending further
instructions
11. Your customer presents a document under an L/C confirmed by yourself. You find the documents to be in compliance with the credit terms
and negotiate the documents and forward the same to the issuing bank for payment, which reach the issuing bank on the same day.
Issuing bank refuses the documents after five banking days stating a valid discrepancy. Which of the following statements is true?
a) You have recourse to the beneficiary
b) You have recourse to the issuing bank
c) You have recourse to the applicant
d) You have no recourse neither to the beneficiary or the issuing bank
12. An LC issued by Bisco Bank evidences the following:
Quantity is 30000 pairs
Amount is USD 555,000.00
Bisco Bank issued an amendment on 18th March changing the following
Quantity as 50000 pairs
Amount as USD 700,000
Beneficiary did not communicate its acceptance of the amendment but shipped 50000 pairs of shoes on 5th March 2007 for USD 700,000
and sent the documents directly to Bisco bank. The documents reached the Bisco bank on 20 th March 2007.
a) Issuing bank is not liable to pay as the shipment was effected before the L/C amendment date
b) Issuing bank should ascertain from the applicant if beneficiary was informed of the amendment before its issuance
c) Issuing bank is liable to pay as the documents comply with LC and amendment
d) Issuing bank is not liable to pay because beneficiary did not communicate acceptance of the amendment
13. You receive an L/C with the following conditions:
Certificate stating that the ship will not sail to any Israeli port
Quality certificate from a first class agency
Beneficiary presents the following documents
Beneficiary certificate stating that the ship will not sail to any Israeli port
Quality and Quantity certificate issued by a subsidiary of the beneficiary
a) Both documents are acceptable
b) Both documents are unacceptable
c) Ist acceptable but II is not
d) II is acceptable but I is not
14. Which of the following is true regarding sending documents on approval basis?
a) Issuing bank need not examine documents
b) Documents do not meet L/C requirements
c) Negotiating bank send documents only after it gets approval from issuing bank
d) All of the above
15. Which of the following is not a transport document?
a) Charter party bill of lading
b) House bill of lading
c) House air way bill
d) Forwarders cargo receipt
16. If a documentary credit calls for a certificate of origin to be issued by official authority, which of the following issuers are not acceptable?
a) Manufacturer (who is different from the beneficiary)
b) Chamber of commerce
c) Government
d) None of the above
17. An L/C in which partial shipment is prohibited is issued for USD 100,000.00 with a tolerance of +10% applicable.
Subsequently an amendment is issued reducing the LC amount to USD 90,000.00. The beneficiary did not expressly communicate
his acceptance/rejection to the amendment, however, presented documents for USD 98,000.00. Then,
a) The beneficiary has accepted the amendment and documents presented are clean
b) The beneficiary has rejected the amendment, but documents are discrepant as partial shipment is prohibited
c) The presentation is not valid, as the beneficiary has not mentioned whether the amendment is accepted/rejected
d) The presentation is clean, though beneficiarys acceptance/rejections is not determinable
18. If a credit issued by MT 999 and without stating full details to follow, do you regard the transmission as the operative instrument

a) Credit is sent via SWIFT medium, hence it is an operative instrument

b) Credit does not state full details to follow, hence it is an operative instrument
c) Both A & B are true
d) Credit is not an operative instrument
19. Which of the following statement is/are False:
a) Unless the nominated bank is the confirming bank, a nomination by the issuing bank does not constitute any undertaking
by the nominated bank to pay, to incur a deferred payment undertaking, to accept drafts or to negotiate
b) The issuing bank can only request and cannot instruct a bank to add confirmation to a credit even if the bank is its own correspondent bank
c) Credits are rarely issued as available with issuing bank
d) The nominated bank does not have to accept the nomination of the issuing bank, but mere fact of nomination imposes an obligation on nominated bank
20. The additional conditions in LC states shipment to be effected on Full Container Load (FCL) basis. The condition should be satisfied in which of the documents:
a) Invoice
b) Bills of lading
c) Separate certificate should be issued by the carrier/agent stating the above condition is fulfilled
d) Should be disregarded since the L/C does not specify the document which needs to evidence the above condition
21. Bank A receives documents from the nominated bank under a letter of credit issued by I. The nominated banks schedule states that they have negotiated documents under reserve due to
discrepancies. The schedule also lists down the discrepancies. Which of the following statements is true?
a) Bank A must reimburse the nominated bank since they have negotiated documents
b) Bank A is not required to send a notice of refusal
c) Bank A is required to send a notice of refusal, only if it finds discrepancies other than the ones mentioned in the nominated banks schedule
d) Bank A may choose to waive the discrepancies mentioned in the schedule and reimburse the nominated bank
22. The issuing bank which receives a request or authority to pay against discrepant documents from a nominated bank
a) Need not refer the discrepancies to the applicant, if the discrepancies are acceptable to it
b) Must refer the discrepancies to the applicant for their approval
c) Must repay to the nominated bank within 5 banking days following the date of receipt of such request
d) The issuing bank is not bound to check documents if it authorises the nominated bank to pay

23. Your customer has presented documents under a documentary credit which had the following terms
Documents required Certificate of origin issued by chamber of commerce
Documents required Manually signed commercial invoice
Special condition All packages to be mark with country of origin India
Which of the following statements are most appropriate?
a) A separate certificate or a certification on the invoice stating all packages are marked with country of origin is required
b) Certificate of origin must show all packages are marked with country of origin
c) A separate certificate is not required, is the certificate of origin states all packages are marked with country with country of origin
d) Special condition can be ignored
24. The confirming bank receives documents on Friday 02 April and finds them to be in order on 05 th April. Tenor is 30 days after the bill of lading date.
The bill of lading is dated 01st April, and the confirming bank agrees to pay the beneficiary immediately. On what date would the confirming
bank expect to receive funds from the issuing bank?
a) 05th April
b) 12th April
c) 30th April
d) 03rd May
25. If an applicant requests that the documentary credit expires for presentation at the issuing bank with drafts drawn on the issuing bank 90 days after sight,
how should the documentary credit be made available?
a) By sight payment
b) By deferred payment
c) By acceptance
d)By,negotiation

26. A documentary credit that will become available for presentation of shipping documents to the issuing bank only after it has received and
approved a performance guarantee is usually described as :
a) Standby
b) Revocable
c) Inoperative
d) Advance Payment
27. In accordance with UCP, what is the maximum number of banking days (inclusive of presentation date) that a confirming bank is allowed to refuse the documents?
a) One

negotiation

b) Three
c) Five
d) Six
28. If an applicant request that the documentary credit expires at the counters of beneficiarys bank with drafts drawn on that bank at 60 days after shipment date,
how should the documentary credit be made available?
a) By mixed payment
b) By deferred payment
c) By negotiation
d) By acceptance