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Questions and Answers
What should the issuing bank do when the beneficiary presents documents that fully comply with the credit terms after the cancellation notice?
Which of the following documents is used to obtain the release of the underlying goods?
What does a marine bill of lading act as?
When does the cancellation of the documentary credit become effective?
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What happens when the beneficiary presents documents to the issuing bank after the cancellation notice?
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What is the purpose of a bill of lading?
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What happens to the documentary credit after the beneficiary is notified that the applicant has ceased trading?
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What is the role of the issuing bank in relation to the documentary credit?
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What is the significance of the date of the cancellation notice in relation to the documentary credit?
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Why would the issuing bank refuse to honour the documents presented by the beneficiary?
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Study Notes
Bill of Lading Details
- Types of bills of lading are B (evidencing shipment from France), C (on-board notation dated 21 May), and D (goods packed in six cartons on two pallets).
- Packing list discrepancy: Bill of lading D states six cartons but packaging details lack pallet information.
Documentary Credit and Shipment
- A documentary credit for USD300,000 covers 300 TV sets CIF New York, allowing partial shipments via Bank N.
- Amended credit details: USD280,000 covering 350 TV sets FOB Hong Kong.
- Final presentation to the issuing bank includes 280 TV sets for USD280,000 CIF New York, without additional communication from the beneficiary or Bank N.
- Issuing bank's required action includes options such as:
- Paying USD280,000
- Contacting the applicant for instructions
- Sending a notice of rejection due to discrepancies
- Returning documents for presentation through Bank N
Payment Timeline
- Delivery of goods occurred on 08 October; documents presented include CMR dated 15 days prior to delivery.
- Credit terms dictate payment is due 30 days after dispatch.
- Expected payment date calculation:
- 08 October plus 30 days results in a payment date of 07 November, falling on Monday 08 November.
Draft Maturity Date
- Issued credit specifies drafts payable at 30 days after the bill of lading date.
- Bill of lading timeline:
- Goods receipt by carrier on 11 June, on-board notation for vessel A on 13 June, and transhipment on vessel B with amended on-board notation to 15 June.
- Draft maturity date falls on 15 July based on the amended notation.
Documentary Credit Presentation Requirements
- A documentary credit mandates an invoice in three copies; compliance requirements include:
- All copies must be original.
- In accordance with ISBP provisions, invoices may include specific adjustments:
- Deduction for discounts not mentioned in the credit.
- Over-shipments marked as free of charge.
- Goods not specified in the credit must be highlighted as free of charge.
Additional Documentary Credit Issuance
- A documentary credit is issued for approximately GBP40,000 with drafts set for 30 days from the shipment date.
- Documents presented on 22 September correspond to bills of lading dated 01 September.
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Description
Test your knowledge on bill of lading with questions extracted from the CDCS Specimen Paper. Questions cover scenarios such as indicating shipment from France, on-board notations, and discrepancies between packing list and actual packing of goods.
