Exam 7: Bank Collections and Letters of Credit

A draft due at a future date or after a specified period of time that has been signed by the buyer is called:

Letters of credit is a revocable commitment by a bank issued on behalf of its client and promising to pay a specific sum of money to a beneficiary upon compliance with the instructions of the letter of credit.

The SWIFT System is an electronic network to handle for the exclusive transmission of international banking transactions and regulated by the World Bank.

Bills of exchange are governed in the U.S.by the _____,in England by the _____,and in over 20 other countries by the _____

Compare and contrast O'Meara with Sztejn.

The internationally accepted body of rules pertaining to letters of credit is:

Under the UCP,banks are responsible for the consequences of delay or loss in transit of any messages,credits,or documents,or for errors of any telecommunication.

The type of letter of credit that can be split up between many suppliers,each able to present their own documents for payment and allowing the trader to take his profits from the balance of the credit,is called:

A holder in due course,as defined by the UCC,includes which of the following? A holder in due course:

Global MegaBank (GMB)issued an irrevocable letter of credit on behalf of its customer Beer Importers of America,Inc.(BIA)for up to $150,000 covering shipments of "Belgian Trappist Ales" from "Beer of the World Distributor" (BWD).BWD subsequently presented its draft and commercial invoice with its name properly spelled as "Beers of the World Distributor." The submitted documents also referred to the shipment of "Belgian Abbey Ales" although the shipments themselves were of "Belgian Trappist Ales." GMB refused to accept these documents because of these discrepancies.GMB noted that use of the name "Trappist" is limited by Belgian law to 6 breweries operated by monastic orders in Belgium.By contrast,abbey ales are brewed by non-monastic entities under licenses to use the names of monasteries or religious icons in their titles.BWD claimed that GMB wrongfully dishonored the documents.BWD claimed the difference in names was excusable as a minor typographical error and that abbey and trappist ales are brewed in the same manner and thus so closely resemble one another as to excuse the discrepancy between the letter of credit and documents. Who would prevail in litigation between GMB and BWD? Please explain your answer.Would the result be different if the court was to apply UCP 600 or the functional standard of compliance? Why or why not?

If the issuing bank accepts documents that contain a discrepancy,the bank cannot seek reimbursement from the account party,its customer.

The type of letter of credit issued to guarantee that a party will fulfill its obligations under a service,construction,or sales contract is called:

In the event that a discrepancy is found in the documents presented under a letter of credit,the bank may request a waiver or:

Seller receives a letter of credit from a foreign buyer covering "1,000 standard-sized bed pillows." Seller's export manager completes an invoice for "1,000 bed pillows,size 20 by 26 inches" (this is the internationally accepted standard size for pillows).Which of the following is false?

A Bill of Exchange is a specialized type of non-negotiable instrument used to expedite payment in a documentary sale.

A holder of a negotiable instrument cannot claim to be a holder in due course if (s)he:

In order to negotiate an order instrument,it must be indorsed and delivered.

Government agencies in the U.S.are not allowed to insure payments made to a U.S.bank if the underlying contract between the buyer and seller is entirely independent from the letter of credit.

A letter of credit is a contract between:

Under the UCP,the description of the goods in the commercial invoice must correspond with the description in the credit.In all other documents,the goods may be described _____