Deck 12: Documentary Transactions

Question 1

In international consignment sales, the exporter retains title to the goods until the distributor sells them.

Answer 1

True

Question 2

In a documentary transaction, a sale of goods contract is converted into a sale of documents contract.

Answer 2

True

Question 3

Drafts that are paid when presented for payment are called time drafts.

Answer 3

False

Question 4

A "Documents against Acceptance" type of documentary collections requires the buyer to sign a sight draft before receiving the necessary documents.

Question 5

The bill of lading is issued by the seller.

Question 6

In a documentary transaction, the seller is payee and the buyer is drawer of the documentary draft.

Question 7

Airway bills of lading must be properly endorsed by the buyer and surrendered to the carrier in order for the buyer to claim the goods.

Question 8

A commercial invoice is a bill for the goods prepared by the buyer.

Question 9

A certificate of origin is an invoice certified by the consul of the country of import.

Question 10

A letter of indemnity allows a carrier to release goods to a consignee not yet in possession of the bill of lading.

Question 11

Generally, insurance certificates are non-negotiable.

Question 12

A pro forma invoice is essentially the same as a price quotation.

Question 13

A received-for-shipment bill of lading warrants that the goods have been placed upon the ship.

Question 14

An order bill of lading allows for delivery only to the named consignee in the bill of lading.

Question 15

A clean bill of lading is a receipt for goods issued by a carrier with an indication that the goods were received in "apparent good order and condition."

Question 16

A marine insurance certificate is not limited to ocean transport and can be used for multi-modal transport.

Question 17

The method of export pricing which considers the direct, out-of-pocket expenses of producing and selling products for export as a floor beneath which prices cannot be set without incurring a loss is known as the cost-plus method.

Question 18

Under COGSA, an ocean carrier may insert a clause in the bill of lading disclaiming itself from any liability.

Question 19

An Airway bill of lading covers only international flights.

Question 20

Under an Airway bill of lading, a shipper has the right to increase the carrier's liability by declaring a higher value for carriage and paying a supplemental charge.

Question 21

Shipment contracts allocate the risk of loss upon the purchaser from the moment of loading or shipment.

Question 22

C&F and C. I.F. are destination contracts.

Question 23

Under the CFR trade term, the buyer pays for insurance.

Question 24

According to Incoterms 2020, the export clearance obligation under FAS is on the seller.

Question 25

Under FOB and FAS, the buyer bears all risks for loss as the goods are loaded onto a ship.

Question 26

Ex-works is the most pro-seller trade term.

Question 27

Destination contracts are more common in international trade than shipment contracts.

Question 28

Under trade terms DES Tokyo, the seller is obligated to pay the cost of transport and insurance, and the buyer pays for the unloading of the ship and customs clearance.

Question 29

Under the trade terms Ex-Factory, the seller is responsible for paying the cost of transport to the seller's factory.

Question 30

In international transactions, the seller's risk is known as ________ and the buyer's risk is known as __________:

A) Delivery risk; credit risk
B) Non-performance risk; delivery risk
C) Credit risk; delivery risk
D) Default risk; non-performance risk

Question 31

Which of the following are the basic methods of payment in international trade ranked in order of the most secure for the importer-buyer:

A) Open account; documentary credit; documentary collection; cash in advance
B) Cash in advance; documentary credit; documentary collection; open account
C) Cash in advance; documentary collection; documentary credit; open account
D) Open account; documentary collection; documentary credit; cash in advance

Question 32

A time draft signed and stamped by a merchant is called a:

A) Trade acceptance
B) Merchant's acceptance
C) Banker's acceptance
D) Documentary acceptance

Question 33

A _______ transfers title to goods and makes the documentary transaction possible:

A) Commercial invoice
B) Bill of lading
C) Certificate of inspection
D) Consular invoice
E) Bill of exchange

Question 34

A __________ is an international customs document for the temporary duty-free import of goods into a country for display, demonstration, or other purposes:

A) Certificate of inspection
B) ISO 9000 certificate
C) ATA Carnet
D) Warehouse receipt
E) Duty Free Zone Certificate

Question 35

A ________ bill of lading can be bought, sold, or traded while goods are in transit and is used for letter-of-credit transactions:

A) Negotiable
B) Shipper's order
C) Straight
D) Both A & B
E) All of the above

Question 36

All of the following are title documents except:

A) Straight bill of lading
B) Negotiable bill of lading
C) Commercial invoice
D) Dock warrant
E) Both C & D

Question 37

A ________ is pre-contractual offer that describes a product, states a price for it, sets the time of shipment, and specifies the sale and payment terms:

A) Pro forma invoice
B) Commercial invoice
C) Packing list
D) Bill of lading
E) Consular invoice

Question 38

A bill of lading serves all of the following functions except:

A) Title document
B) Evidence of receipt that the goods were delivered to a vessel
C) Valuation for customs purposes
D) Carriage contract between the ship owner and shipper

Question 39

The person or firm named in a bill of lading to whom goods are to be turned over is the:

A) Buyer
B) Consignee
C) Receiving party
D) Notify party

Question 40

U.S. Customs requires a Shippers Export Declaration for all exports valued at more than:

A) $1,000
B) $2,500
C) $5,000
D) $10,000

Question 41

The current effort to electronically transmit all standard shipping documents is known as the:

A) Russia Project
B) Bolero project
C) CMI Electronic Documents Act
D) None of the above

Question 42

In letter of credit transactions, a ________ is necessary for the shipper to obtain payment from the bank:

A) Clean Bill of lading
B) Clean, On-Board, Order Bill of Lading
C) Clean, Received-for-shipment, Straight Bill of Lading
D) Clean, On-Board, Straight Bill of Lading
E) Clean, Received-for-shipment, Order Bill of Lading

Question 43

Under COGSA, if a receiving party receives goods in which there is a loss and the loss is not apparent at the time of receiving the goods, then notice must be given in writing within:

A) 3 days
B) 5 days
C) 7 days
D) 15 days
E) None of the above

Question 44

The statute of limitations under COGSA for filing a suit for loss against a carrier is:

A) 6 months
B) 1 year
C) 18 months
D) 2 years

Question 45

An Airway bill of lading acts as which of the following:

A) Title document
B) Contract of carriage
C) Shipper's receipt for goods
D) Both B & C
E) All of the above

Question 46

Under which of the following trade terms would the seller's quotation cover all costs up to and including delivery of goods aboard an overseas vessel.

A) FAS
B) CIF
C) FOB
D) CPT

Question 47

All of the following Incoterm trade terms can be used for multi-modal transport except which of the following:

A) FCA
B) CPT
C) FAS
D) DDU
E) DDP

Question 48

All of the following trade terms refer to 'shipment contracts' except:

A) CPT
B) FAS
C) DDU
D) Ex Works
E) Both C & D

Question 49

The trade term ___________ requires the most responsibility on the part of the seller:

A) Cost, Insurance, Freight (CIF)
B) Ex-works
C) Delivered Duty Paid (DDP)
D) Delivered Ex Ship (DES)
E) Free on Board (FOB)

Question 50

The documentary transaction requires the buyer and seller to enlist the services of third parties. Briefly describe the role banks, inspection agents, insurance companies, freight forwarders, common carriers and customs brokers play in the documentary transaction.

Question 51

Name seven documents needed for exporting. Explain the purpose of each document and its purpose.

Question 52

What functions does a bill of lading serve? Describe the various types of bills of lading and their purposes.

Question 53

Provide one example of a trade term from each of the four groups in Incoterms. Explain the meaning of each term and note where the risk of loss passes from seller to buyer.

Question 54

How does the documentary transaction serve to reduce the risk of both the buyer and the seller?