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LW C Transport and payment in international trade

Written by Saad Rahman (ACCA)

7 ACCA Corporate and Business Law questions with answers and explanations.

Printable worksheet with answer key

All questions with answers
  1. Which of these is a function of a bill of lading?

    • 1 A guarantee of the quality of the goods
    • 2 A statement of the seller's profit
    • 3 A bank's promise to pay
    • 4 A receipt for the goods
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    Correct answer: A receipt for the goods

    A bill of lading is a receipt, evidence of the contract of carriage and, if negotiable, a document of title.

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  2. A negotiable bill of lading is a document of title. This means that:

    • 1 The goods cannot be sold
    • 2 The seller can cancel the contract
    • 3 The holder can claim the goods and transfer the right to them by transferring the document
    • 4 The goods belong to the carrier
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    Correct answer: The holder can claim the goods and transfer the right to them by transferring the document

    This is what makes it important in trade finance.

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  3. What is a letter of credit?

    • 1 A promise by a seller to deliver goods
    • 2 A loan from the buyer to the seller
    • 3 A guarantee of the quality of the goods
    • 4 A bank's undertaking to pay the seller against compliant documents
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    Correct answer: A bank's undertaking to pay the seller against compliant documents

    The bank deals with documents, not goods.

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  4. Which statement about letters of comfort is correct?

    • 1 They are generally not intended to be legally binding guarantees
    • 2 They are issued by customs
    • 3 They replace letters of credit
    • 4 They are always legally binding
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    Correct answer: They are generally not intended to be legally binding guarantees

    A letter of comfort states support but is usually not a guarantee.

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  5. In a bill of exchange, who is the drawer?

    • 1 The bank
    • 2 The person who receives the payment
    • 3 The person who is ordered to pay
    • 4 The person who writes the order to pay
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    Correct answer: The person who writes the order to pay

    The drawer orders the drawee to pay the payee.

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  6. Which UNCITRAL instrument sets rules for international credit transfers?

    • 1 The Model Law on International Credit Transfers
    • 2 The Model Law on International Commercial Arbitration
    • 3 The Incoterms
    • 4 The Sale of Goods Convention
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    Correct answer: The Model Law on International Credit Transfers

    It deals with the obligations of banks in transfers.

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  7. Why is a letter of credit useful to a seller?

    • 1 It makes the contract unenforceable
    • 2 It removes the need to ship goods
    • 3 It makes the buyer pay twice
    • 4 The bank pays when compliant documents are presented, which reduces the risk of non-payment
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    Correct answer: The bank pays when compliant documents are presented, which reduces the risk of non-payment

    It replaces reliance on the buyer's promise with the bank's.

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