LW C Transport and payment in international trade

Written by Saad Rahman (ACCA)

ACCA · Corporate and Business Law · 7 questions

Name: ____________________ Date: ____________

Which of these is a function of a bill of lading?
- A A guarantee of the quality of the goods
- B A statement of the seller's profit
- C A bank's promise to pay
- D A receipt for the goods
A negotiable bill of lading is a document of title. This means that:
- A The goods cannot be sold
- B The seller can cancel the contract
- C The holder can claim the goods and transfer the right to them by transferring the document
- D The goods belong to the carrier
What is a letter of credit?
- A A promise by a seller to deliver goods
- B A loan from the buyer to the seller
- C A guarantee of the quality of the goods
- D A bank's undertaking to pay the seller against compliant documents
Which statement about letters of comfort is correct?
- A They are generally not intended to be legally binding guarantees
- B They are issued by customs
- C They replace letters of credit
- D They are always legally binding
In a bill of exchange, who is the drawer?
- A The bank
- B The person who receives the payment
- C The person who is ordered to pay
- D The person who writes the order to pay
Which UNCITRAL instrument sets rules for international credit transfers?
- A The Model Law on International Credit Transfers
- B The Model Law on International Commercial Arbitration
- C The Incoterms
- D The Sale of Goods Convention
Why is a letter of credit useful to a seller?
- A It makes the contract unenforceable
- B It removes the need to ship goods
- C It makes the buyer pay twice
- D The bank pays when compliant documents are presented, which reduces the risk of non-payment

Answer key

1. D, 2. C, 3. D, 4. A, 5. D, 6. A, 7. D

A bill of lading is a receipt, evidence of the contract of carriage and, if negotiable, a document of title.
This is what makes it important in trade finance.
The bank deals with documents, not goods.
A letter of comfort states support but is usually not a guarantee.
The drawer orders the drawee to pay the payee.
It deals with the obligations of banks in transfers.
It replaces reliance on the buyer's promise with the bank's.