CDCS Level 4 Specimen Paper B

A complying presentation is defined as one which is in accordance with all of the following except:

• international standard banking practice.

• the terms of the documentary credit.

• the terms of the underlying contract.

• Uniform Customs and Practice for Documentary Credits.

Which of the following always applies to both documentary credits and standby credits?

• The issuer is not concerned with any underlying sales contracts, goods or performances.

• They are a guarantee in the event of failure to perform a contractual undertaking.

• They are a primary means of payment for delivery of goods.

• They may include a provision for advance payment.

An issuing bank is requested to provide a guarantee of payment to the beneficiary in the event of default on a contract. The beneficiary has stipulated that electronic presentations must be allowed. Which of the following could be issued?

1. 1.Guarantee subject to URR 725.

2. 2.Standby credit subject to ISP98.

3.Standby credit subject to UCP 600.

4.Standby credit subject to eUCP.

• 1 and 2 only

• 2 and 4 only

• 1 and 4 only

• 2 and 3 only

A clean credit:

• does not require any documents other than a draft or demand for payment.

• ensures the issuing bank maintains control of the goods.

• is only referred to as a direct-pay standby.

• must contain an inoperative clause.

For a freely available transferable documentary credit, which of the following statements is correct?

• Any bank in the beneficiary’s country can be the transferring bank.

• The advising bank automatically becomes the transferring bank.

• The issuing bank must nominate the transferring bank.

• There is no need to designate a transferring bank.

A commercial standby letter of credit is usually issued to secure the:

• buyer’s obligation to pay the seller.

• buyer’s obligation to repay a trade finance loan.

• seller’s obligation to repay a pre-shipment loan.

• seller’s obligation to supply goods to the buyer.

To obtain an advance payment under a red clause documentary credit, any of the following may be required except for a(n):

• beneficiary's undertaking.

• bill of lading marked ‘freight collect’.

• confirmation from a shipping agent.

• invoice.

An exporter is selling shirts to an importer with payment due 45 days after shipment. The contract stipulates that there are to be 12 monthly shipments, each comprising approximately 2,000 shirts. The cost of each of the shirts is EUR8.00. Which of the following would best secure the exporter's receivables?

• documentary credit for EUR192,000.

• documentary credit for EUR17,600 revolving 11 times on payment, subject to applicant's approval.

• instalment documentary credit for EUR211,200.

• standby credit for EUR35,200.

According to UCP 600, the terms ‘prompt’, ‘immediately’ and ‘as soon as possible’ may be disregarded unless:

• the credit is stated to be ‘transferable’ and a transfer request is actioned.

• they are required to appear within the wording of a document.

• they are used within the context of acceptance or rejection of any amendments by the issuing bank.

• they relate to the date of shipment of the underlying goods.

In accordance with ISBP 745, which of the following invoices would not be acceptable?

• document entitled ‘consular invoice’ where the underlying credit requested an ‘invoice’.

• invoice describing the goods as ‘refurbished electric pumps’ where the underlying credit details the goods' description as ‘electric pumps’.

• invoice that shows a discount for an advance payment.

• undated invoice.