Exam 7: Bank Collections and Letters of Credit

Compare and contrast the holdings pertaining to fraud in Sztejn and United City Merchants.

The obligations under the letter of credit between the seller and buyer and independent of the sales contract between the seller and the buyer.

"Bill of exchange" and "international draft" are two names for the same type of negotiable instrument.

The seller in a letter of credit transaction is called the:

Bolero is a private company founded by a consortium of the world's largest banks to provide secure "digital identities" or signatures for confidentiality and authentication of financial and legal documents.

If a U.S.exporter is concerned about political and economic stability in the buyer's country,the exporter should request which of the following payment terms:

The Convention on Bills of Exchange as well as U.S.and English domestic laws require the language "bill of exchange" to appear clearly and prominently on the face of the instrument.

Maurice O'Meara Co.v.National Park Bank of New York involved a letter of credit for a shipment of newsprint.The bank was concerned that the shipment was not as represented in the documents.In finding in favor of the seller's assignee,the court:

As a seller to a foreign market,assess whether you would prefer to use a documentary sale than a sale on open account terms.

The issuing bank is required to pay on documents in case of _____,but not in the event of:

A documentary draft issued for the purchase of goods by ABC Co.payable to XYZ Co.,payable upon presentation,defines ABC Co.as the _____,XYZ Co.as the _____,and the specialized name for the documentary draft is _____

Compare and contrast the liabilities of a confirming bank and an issuing bank on a letter of credit.

The issuing bank will honor the draft as long as the documents appear to be in good order on their face and correspond to the terms of the letter of credit,regardless of the conditions of the goods received.

When the Seller's bank guarantees payment under the letter of credit issued by buyer's bank it becomes a(n):

A red clause in a letter of credit is a promise by the advising bank to reimburse the seller's bank for loans made to the seller.

Which of the following is (are)true concerning the UCP?

Letters of credit are a bank's promise to pay provided that all of the terms and documents required submitted are correct.

The risk of loss due to the default of the buyer based on his or her inability to pay is known as:

A back-to-back letter of credit is actually two letters of credit used as a financing device.

Which of the following institutions does not provide credit guarantees to back trade finance lending by commercial institutions?