CDCS SAMPLE TEST 9/25 With Answers

1. 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 bank’s 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 bank’s 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 20^th. The presentation is not honored by Bank  N. The beneficiary then sends the documents directly to you on March 25^th 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 6^th March. Bank finds the documents to be discrepant. Which of the following notice of refusal sent by Bank I is valid? [ 7^th March is Friday, Bank I does not work on Saturdays and Sundays , there are no bank holidays in March ]

a) A message sent on 13^th 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 12^th 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 an 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 18^th 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 5^th 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) Forwarder’s 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 beneficiary’s 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 need

    to evidence the above condition

21. Bank A receives documents from the nominated bank under a letter of credit issued by I. The nominated bank’s 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 bank’s 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 againt 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 replay 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 an 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 01^st 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) 05^th April

b) 12^th April

c) 30^th April

d) 03^rd 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

b) Three

c) Five

d) Six

28. If an applicant request that the documentary credit expires at the counters of beneficiary’s 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

ANSWERS

1.                  B

2.                  C

3.                  D

4.                  D

5.                  D

6.                  C

7.                  C

8.                  C

9.                  D

10.             B

11.             B

12.             C

13.             A

14.             B

15.             D

16.             D

17.             D

18.             D

19.             D

20.             D

21.             D

22.             A

23.             D

24.             D

25.             C

26.             C

27.             D

28.             D