Topic 5

Question 1

What information is in the collection order

Answer 1

dp/da
protection of goods
collection charges
protest
advice of dishonour
case of need
mode of payment

Question 2

What is a collection order?

Answer 2

form of authority, export give specific instructions to remitting bank

Question 3

What are the uniform rules of collection

Answer 3

7: default is D/P
9: bank take reasonable care
10: no obligation of bank for goods
24: no protest default
25: must indicate case of need

Question 4

What is a documentary credit?

Answer 4

conditional undertaking or guarantee by a bank

effect payment to exporter

Question 5

What is an irrevocable credit?

Answer 5

cannot be ammended or cancelled without the consent of all parties concerned

Question 6

What is a confirmed credit

Answer 6

confirming bank gives assurance of payment should issuing bank default

Question 7

What are the four terms of payment

Answer 7

open a/c
advance payment
collection
documentary credit

Question 8

What are the types of collection

Answer 8

clean

documentary

Question 9

What are the methods of payment under documentary credit

Answer 9

sight
acceptance
negotiation

Question 10

What are the common discrepancies

Answer 10

late shipment
letter of credit expired
drawing exceeds amount of credit
wrong description of goods
stale b/l
documents missing

Question 11

What are the alternatives for the negotiating bank to deal with discrepancies?

Answer 11

documents may be rectified
Documents may not be rectified
- payment under reserve
-cable issuing bank for authority to pay
-send documents on documentary collection basis

Question 12

What are the variations of documentary credits?

Answer 12

red clause credit
revolving credit
transferable credit
back-to-back credit

Question 13

What are the rules for a bank (UCP)

Answer 13

5: banks concerned with docs onyl
9: advising bank, reasonable care credit is genuine
34: reasonable care not responsible for forgeries