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7 ACCA Corporate and Business Law questions with answers and explanations.
Printable worksheet with answer key
Which of these is a function of a bill of lading?
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.
A negotiable bill of lading is a document of title. This means that:
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.
What is a letter of credit?
Correct answer: A bank's undertaking to pay the seller against compliant documents
The bank deals with documents, not goods.
Which statement about letters of comfort is correct?
Correct answer: They are generally not intended to be legally binding guarantees
A letter of comfort states support but is usually not a guarantee.
In a bill of exchange, who is the drawer?
Correct answer: The person who writes the order to pay
The drawer orders the drawee to pay the payee.
Which UNCITRAL instrument sets rules for international credit transfers?
Correct answer: The Model Law on International Credit Transfers
It deals with the obligations of banks in transfers.
Why is a letter of credit useful to a seller?
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.