Letter of Credit Quiz

What does the "expiry date" clause in an LC indicate?

• The date the shipment must be delivered.

• The date the LC become void.

• The date payment must be made.

• The date documents must be issued.

If an LC states "documents to be presented within 21 days after shipment" but the LC expires in 15 days after shipment, which date takes precedence for document submission?

• The 21-day presentation period.

• The shipments date.

• The LC expiry date.

• It depends on the issuing bank's policy.

If the LC specifies "FOB terms" but the presented documents show "CIF terms", what is the likely outcome?

• The discrepancy must be corrected before payment can be made.

• The LC will be honored since FOB and CIF are similar.

• The advising bank can amend the LC terms.

• The LC will automatically expire without payment.

If the LC is silent about the bank charges for amendments, who is generally responsible for the charges?

• The beneficiary.

• The issuing bank.

• The applicant.

• The advising bank.

If an LC requires an "on board" notation on the bill of lading, but the presented document only states "shipped", is this acceptable?

• Yes, as "shipped" implies "on board".

• No, unless "on board" is specifically stated.

• It depends on the issuing bank's interpretation.

• The discrepancy can be waived by the advising bank.

Complying presentation means a presentation that is:

• Within LC validity only.

• Presenting of all shipping documents.

• Document presentation using original documents only.

• In accordance with LC terms and conditions.

A confirmed letter of credit means that the letter of credit has been:

• Read by the beneficiary or their legal counsel.

• Approved by the buyer.

• Guaranteed by a second bank.

• None of these.

What will happen if beneficiary name is slightly error. For example: Mitsuit and Co. (Malaysia) Sdn Bhd instead of Mitsui and Co (Malaysia) Sdn Bhd.

• It is reasonable since there is clause mention typo error or misspelling is acceptable.

• It will trigger discrepancy.

• LC need to be confirmed by applicant.

• It depends on the issuing's bank terms and condition.