Documentary Credit Quiz

When an advising or second advising bank issues its advice of a documentary credit, it signifies that it has found the documentary credit or its advice to be which of the following?

• Genuine

• Authentic

• Apparently genuine

• Apparently authentic

‘A second advising bank is required to determine the apparent authenticity of the documentary credit issued by the issuing bank.’ Is this statement true or false?

• True

• False

‘Because a documentary credit that is to be advised to a beneficiary conveys no engagement or responsibility of an advising or second advising bank, its contents need not be examined against bank policy.’ Is this statement true or false?

• True

• False

According to UCP 600, article 8, a confirming bank is irrevocably bound to honour or negotiate from when?

• When the beneficiary receives the documentary credit

• When the beneficiary presents complying documents under the credit

• When it issues its advice of confirmation

• When it determines that the transaction falls within the credit facility of the issuing bank

‘An authorisation of the issuing bank, for a bank to add its confirmation at the specific request of the beneficiary, is indicated in Field 49 of a SWIFT MT700 message by the word “Confirm”.’ Is this statement true or false?

• True

• False

‘An advising bank or second advising bank is not required to examine a documentary credit to determine whether it is in a workable form.’ Is this statement true or false?

• True

• False

In accordance with UCP 600, which of the following terms may not be altered when transferring a documentary credit?

• Credit amount.

• Percentage of insurance cover.

• Period for presentation.

• Required documents.

What is the meaning of Advising Bank ?

• the bank that advises the credit at the authorization of the issuing bank

• the bank that advises the credit at the request of the issuing bank

• the bank that advises the credit at the request of the beneficiary

• the bank that advises the credit at the authorization of the nominated bank

Which of the following is true of a transferred credit? The expiry date, latest shipment date and / or period for presentation that appear in a transferable credit may:

i. be increased

ii. be reduced

iii. remain the same

• i

• ii

• ii and iii

• i, ii, dan iii

A confirming bank receives a documentary credit containing the following additional condition: 'carrying vessel must not be older than 15 years'. Upon receipt of the documents from the beneficiary, the confirming bank must:

• deem such condition as not stated and disregard it.

• look for this statement on one of the documents.

• refuse payment to the beneficiary until receipt of the issuing bank's clarification.

• require the beneficiary to issue a statement of compliance.