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Article 09 : Advising of Credits and Amendments

1. Can an LC be sent by the issuing bank directly to the beneficiary without the use of an advising bank?SLIDE #2

01. Can an LC be sent by the issuing bank directly to the beneficiary without the use of an advising bank? Yes,….. but it is in the beneficiary's interest to have it advised through a reliable bank in order to ensure it is authenticated.SLIDE #3

02. A bank has received an LC to be advised to the beneficiary through another bank. Can it choose to advise the LC directly to the beneficiary without taking the beneficiary's consent?SLIDE #4

02. A bank has received an LC to be advised to the beneficiary through another bank. Can it choose to advise the LC directly to the beneficiary without taking the beneficiary's consent?• No. It is advisable to take the beneficiary's consent as they may have made special arrangements for processing with their own bankers.SLIDE #5

03 The advising bank which does not wish to act on the nomination or confirm the LC should expressly indicate in its advice enclosing the credit that:I. It undertakes no liability and gives no undertaking in respect of the creditII. It will merely forward documents presented to them to the issuing bank if so required by the beneficiaryIII. The LC has not been authenticated, in cases where it is unable to establish the authenticity of the LCIV. It has established the authenticity of the creditOptions:A. I, II and IIIB. II, III and IVC. I, III and IVD. I, II and IVSLIDE #6

03 The advising bank which does not wish to act on the nomination or confirm the LC should expressly indicate in its advice enclosing the credit that:I. It undertakes no liability and gives no undertaking in respect of the creditII. It will merely forward documents presented to them to the issuing bank if so required by the beneficiaryIII. The LC has not been authenticated, in cases where it is unable to establish the authenticity of the LCIV. It has established the authenticity of the creditOptions:A. I, II and IIIB. II, III and IVC. I, III and IVD. I, II and IVSLIDE #7

04. If a bank receives a credit through mail after having previously received it through an authenticated teletransmission, which of the following statements are TRUE?A. It should consider the credit issued through tele transmission as the operative credit instrument provided the teletransmission does not state “full details to follow”B. It should always consider the credit received through mail as the operative credit instrumentC. It should seek clarification from the issuing bankD. It should advise both the documentary credits to the beneficiary and request them to determine which of the two is the operative credit instrumentSLIDE #8

04. If a bank receives a credit through mail after having previously received it through an authenticated teletransmission, which of the following statements are TRUE?A. It should consider the credit issued through tele transmission as the operative credit instrument provided the teletransmission does not state “full details to follow”B. It should always consider the credit received through mail as the operative credit instrumentC. It should seek clarification from the issuing bankD. It should advise both the documentary credits to the beneficiary and request them to determine which of the two is the operative credit instrumentSLIDE #9

05. An advising banks acts as per UCP 600A. If it refuses to add confirmation to a documentary credit upon request from the issuing bank but still advises the credit to the beneficiaryB. If it advises an incomplete credit to the beneficiary without mentioning the fact that the credit appeared incompleteC. If it takes no action on receipt of an incomplete credit, assuming that the issuing bank will provide all necessary information laterD. If it disregards an LC which could not be authenticated by itSLIDE #10

05. An advising banks acts as per UCP 600A. If it refuses to add confirmation to a documentary credit upon request from the issuing bank but still advises the credit to the beneficiaryB. If it advises an incomplete credit to the beneficiary without mentioning the fact that the credit appeared incompleteC. If it takes no action on receipt of an incomplete credit, assuming that the issuing bank will provide all necessary information laterD. If it disregards an LC which could not be authenticated by itSLIDE #11

06. Issuing Bank requests the advising bank to add its confirmation to the credit but the advising bank is not prepared to add its confirmation. Advising bank must:A. Cannot refuse to confirm the LCB. Inform the issuing bank of its unwillingness to confirm and advise the credit to the beneficiary unconfirmedC. Inform the issuing bank of its unwillingness to confirm and should not advise the LC to the beneficiaryD. Confirm the LC only if their charges are doubledSLIDE #12

06. Issuing Bank requests the advising bank to add its confirmation to the credit but the advising bank is not prepared to add its confirmation. Advising bank must:A. Cannot refuse to confirm the LCB. Inform the issuing bank of its unwillingness to confirm and advise the credit to the beneficiary unconfirmedC. Inform the issuing bank of its unwillingness to confirm and should not advise the LC to the beneficiaryD. Confirm the LC only if their charges are doubledSLIDE #13

07. A bank which advises the credit to the beneficiary has the following obligation(s):A. To honour or negotiate on presentation of documentsB. To confirm the CreditC. To ensure apparent authenticity of the credit before advisingD. Advance pre-shipment loan to the beneficiarySLIDE #14

07. A bank which advises the credit to the beneficiary has the following obligation(s):A. To honour or negotiate on presentation of documentsB. To confirm the CreditC. To ensure apparent authenticity of the credit before advisingD. Advance pre-shipment loan to the beneficiarySLIDE #15

08. The issuing bank advised the credit to the beneficiary through ABC Bank Ltd, Singapore (advising bank) and XYZ Bank Ltd, Singapore (Second advising bank). The issuing bank has the following option(s) to advise any future amendments to the credit:A. Directly to the beneficiaryB. Only to the advising bankC. Only to the advising bank who will in turn advice through the second advising bankD. Only to the second advising bankSLIDE #16

08. The issuing bank advised the credit to the beneficiary through ABC Bank Ltd, Singapore (advising bank) and XYZ Bank Ltd, Singapore (Second advising bank). The issuing bank has the following option(s) to advise any future amendments to the credit:A. Directly to the beneficiaryB. Only to the advising bankC. Only to the advising bank who will in turn advice through the second advising bankD. Only to the second advising bankSLIDE #17

09. True or false?• A bank that is requested to advise a credit must send the credit to the beneficiary.• True• FalseSLIDE #18

09. True or false?• A bank that is requested to advise a credit must send the credit to the beneficiary.• True• FalseSLIDE #19

Article 11: Teletransmitted and Pre-Advised Credits and Amendments

1. You have issued a pre-advice for a credit on 15 February via MT 705 which includes these details:• Expiry date: 30 March• Latest shipment date: 01 March• Partial shipment: Allowed• On 16 February, the applicant submitted a request for issuance of the LC as follows:• Expiry date: 30 June• Latest shipment date: 01 June• Partial shipment: Not AllowedAs per UCP 600, what MUST you do?A. Check with the applicant if there is any change in the presentation periodB. Issue the LC incorporating the revised detailsC. Issue the LC as per the pre-advice and issue a separate amendment for the changesD. Issue the LC without incorporating the partial shipment conditions but incorporating the other two changes as they are not detrimental to the beneficiarySLIDE #21

01. You have issued a pre-advice for a credit on 15 February via MT 705 which includes these details:• Expiry date: 30 March• Latest shipment date: 01 March• Partial shipment: Allowed• On 16 February, the applicant submitted a request for issuance of the LC as follows:• Expiry date: 30 June• Latest shipment date: 01 June• Partial shipment: Not AllowedAs per UCP 600, what MUST you do?A. Check with the applicant if there is any change in the presentation periodB. Issue the LC incorporating the revised detailsC. Issue the LC as per the pre-advice and issue a separate amendment for the changesD. Issue the LC without incorporating the partial shipment conditions but incorporating the other two changes as they are not detrimental to the beneficiarySLIDE #22

02. A documentary credit pre-advice is issued on 1 March for USD 510,000.00 with the following terms and conditions:Part SHIPMENT allowed.- Latest shipment date 30 April.- Expiry date 15 May.On 2 March the applicant requests an amendment prohibiting part shipment and extending the expiry date to 30 May. In accordance with UCP 600 what MUST the issuing bank do?A. Clarify with the applicant the period for presentation.B. Issue the documentary credit as originally instructed.C. Issue the documentary credit incorporating all the amendments.D. Issue the documentary credit incorporating only the extended expiry date.SLIDE #23

02. A documentary credit pre-advice is issued on 1 March for USD 510,000.00 with the following terms and conditions:Part SHIPMENT allowed.- Latest shipment date 30 April.- Expiry date 15 May.On 2 March the applicant requests an amendment prohibiting part shipment and extending the expiry date to 30 May. In accordance with UCP 600 what MUST the issuing bank do?A. Clarify with the applicant the period for presentation.B. Issue the documentary credit as originally instructed.C. Issue the documentary credit incorporating all the amendments.D. Issue the documentary credit incorporating only the extended expiry date.SLIDE #24

03. If an issuing bank issues a pre-advice of a credit can they subsequently advise that they are cancelling the credit?SLIDE #25

03. If an issuing bank issues a pre-advice of a credit can they subsequently advise that they are cancelling the credit?• No. ………….. The rule in sub-article 11 (b) is quite clear –the issuing bank is irrevocably committed to issue the operative credit. If a bank has any doubt as to whether a credit will be issued, no pre-advice should be sent. SLIDE #26

Article 12 : Nomination

01. A Credit issued under UCP 600 is available with Bank N by Deferred Payment. The beneficiary presents credit compliant documents to Bank N and requests for immediate payment. Can Bank N prepay?SLIDE #28

01. A Credit issued under UCP 600 is available with Bank N by Deferred Payment. The beneficiary presents credit compliant documents to Bank N and requests for immediate payment. Can Bank N prepay?SLIDE #29

02. A nominated bank receives documents from a beneficiary under a deferred payment credit and forwards the documents to the issuing bank without providing an undertaking to the beneficiary (nor does it give any commitment to do so on a future date). If the bank discounts the same set of documents after acceptance by the issuing bank, does the bank enjoy the same position as a bank which had provided an undertaking prior to forwarding documents to the issuing bank? SLIDE #30

02. A nominated bank receives documents from a beneficiary under a deferred payment credit and forwards the documents to the issuing bank without providing an undertaking to the beneficiary (nor does it give any commitment to do so on a future date). If the bank discounts the same set of documents after acceptance by the issuing bank, does the bank enjoy the same position as a bank which had provided an undertaking prior to forwarding documents to the issuing bank? • Answer: In order to “discount” under the deferred payment, the nominated bank would be wise to request the agreement of the issuing bank to incur their deferred payment undertaking and then to prepay there under. Discounting, by a nominated bank, of the issuing bank‟s deferred payment undertaking is not covered by sub-article 12 (b). Article 12SLIDE #31

3. What obligation does a nominated bank have to honour or negotiate?• Unless agreed to by the nominated bank and communicated to the beneficiary, a nominated bank is not obligated to honouror negotiate.4.Does the receipt or examination and forwarding of documents by a nominated bank make it liable to honour or negotiate?• No, it does not.5.Under what circumstances is a nominated bank obligated to honour or negotiate?• A nominated bank is obligated to honour or negotiate only when expressly agreed to by that nominated bank and so communicated to the beneficiary.6.What kind of bank is not obligated to honour or negotiate, unless specifically agreed upon?• Unless specifically agreed upon, a nominated bank that is not a confirming bank is not obligated to honour or negotiate.7.Is a nominated bank liable to honour or negotiate if it is not a confirming bank?• No, it is not.8. What does receipt or examination and forwarding of documents by a nominated bank that is not a confirming bank constitute?• It does not constitute honour or negotiation.SLIDE #32

SLIDE #33

Article 13 : Bank-to-Bank Reimbursement Arrangements

1. Will an L/C (subject to UCP) containing instructions for bank-to-bank reimbursements automatically be subject to latest version of the URR?SLIDE #35

01. Will an L/C (subject to UCP) containing instructions for bank-to-bank reimbursements automatically be subject to latest version of the URR?SLIDE #36

02. An LC stated, "Claim reimbursement from reimbursing bank certifying all terms and conditions have been complied with." The claiming bank sent a claim without the certification. Is the claim valid?SLIDE #37

02. An LC stated, "Claim reimbursement from reimbursing bank certifying all terms and conditions have been complied with." The claiming bank sent a claim without the certification. • Is the claim valid?SLIDE #38

03. Which of the following statements is FALSE with regard to URR 725?A. Unless otherwise it has issued a reimbursement undertaking, a reimbursing bank is not obliged to honour a reimbursement claimB. When a bank is not prepared to act in accordance with the reimbursement authorization, it should advise the issuing bank without delayC. When a bank is not prepared to act in accordance with the reimbursement authorization, it should inform the advising bank of the credit without delayD. Issuing banks should not require a sight drafts to be drawn on the reimbursing bankSLIDE #39

03. Which of the following statements is FALSE with regard to URR 725?A. Unless otherwise it has issued a reimbursement undertaking, a reimbursing bank is not obliged to honour a reimbursement claimB. When a bank is not prepared to act in accordance with the reimbursement authorization, it should advise the issuing bank without delayC. When a bank is not prepared to act in accordance with the reimbursement authorization, it should inform the advising bank of the credit without delayD. Issuing banks should not require a sight drafts to be drawn on the reimbursing bankSLIDE #40

04. Your bank has issued a reimbursement undertaking under a LC. Which of the following statements is TRUE?A. The claim sent to you must be in accordance with the terms and conditions of the LCB. The issuing bank is not required to pay the claiming bank if the claiming bank fails to claim from youC. Your bank will entertain request to pay claim with a back valueD. Your bank cannot disregard a claim received 3 banking days prior to the value dateSLIDE #41

04. Your bank has issued a reimbursement undertaking under a LC. Which of the following statements is TRUE?A. The claim sent to you must be in accordance with the terms and conditions of the LCB. The issuing bank is not required to pay the claiming bank if the claiming bank fails to claim from youC. Your bank will entertain request to pay claim with a back valueD. Your bank cannot disregard a claim received 3 banking days prior to the value dateSLIDE #42

05. Which of the following statements is TRUE regarding reimbursement claims?A. An issuing bank is not responsible for delay in payment by the reimbursing bank, which has issued a reimbursement undertakingB. A reimbursing bank is required to check if duplicate claims are made by the claiming bankC. In a freely negotiable credit, it is not possible to debit the account of the issuing bankD. A reimbursing bank is not authorised to disregard claims received 10 banking days prior to the value dateSLIDE #43

05. Which of the following statements is TRUE regarding reimbursement claims?A. An issuing bank is not responsible for delay in payment by the reimbursing bank, which has issued a reimbursement undertakingB. A reimbursing bank is required to check if duplicate claims are made by the claiming bankC. In a freely negotiable credit, it is not possible to debit the account of the issuing bankD. A reimbursing bank is not authorised to disregard claims received 10 banking days prior to the value dateSLIDE #44

06. Your bank agrees to act as a reimbursing bank as per URR 725. The confirming bank received documents on 01 November and sent a reimbursement claim on 02 November. You receive the claim on 03 November. Documents reach the issuing bank on 05 November. What is the latest date by which you must process the reimbursement claim? (Assume that there are no bank holidays between 1 to 10 November)A. 04 NovemberB. 05 NovemberC. 06 NovemberD. 08 NovemberSLIDE #45

06. Your bank agrees to act as a reimbursing bank as per URR 725. The confirming bank received documents on 01 November and sent a reimbursement claim on 02 November. You receive the claim on 03 November. Documents reach the issuing bank on 05 November. What is the latest date by which you must process the reimbursement claim? (Assume that there are no bank holidays between 1 to 10 November)A. 04 NovemberB. 05 NovemberC. 06 NovemberD. 08 NovemberSLIDE #46

07. A bank which has issued a reimbursement undertaking received a claim that complied with the terms and conditions of the undertaking. Before they could honour the claim, the issuing bank gave instructions that the claim should not be honoured as they suspected that shipment was not as per LC terms. What is the best course of action for the reimbursing bank as per URR 725?A. Request claiming bank to cancel the claimB. Instruct claiming bank to contact the beneficiaryC. Honour the claim and debit the issuing bank‟s accountD. Dishonor the claim as per the issuing bank‟s instructionSLIDE #47

07. A bank which has issued a reimbursement undertaking received a claim that complied with the terms and conditions of the undertaking. Before they could honour the claim, the issuing bank gave instructions that the claim should not be honoured as they suspected that shipment was not as per LC terms. What is the best course of action for the reimbursing bank as per URR 725?A. Request claiming bank to cancel the claimB. Instruct claiming bank to contact the beneficiaryC. Honour the claim and debit the issuing bank‟s accountD. Dishonor the claim as per the issuing bank‟s instructionSLIDE #48

08. Which of the following is TRUE regarding a reimbursement undertaking?A. It need not indicate the terms and conditions of the undertakingB. It must include the reimbursing bank‟s charges that will be deducted from the claim if the party to pay the reimbursement undertaking fee is other than the issuing bankC. It need not indicate the latest date for presentation of a claim including any usance periodD. Reimbursement undertaking must require the draft to be drawn on the reimbursing bankSLIDE #49

08. Which of the following is TRUE regarding a reimbursement undertaking?A. It need not indicate the terms and conditions of the undertakingB. It must include the reimbursing bank‟s charges that will be deducted from the claim if the party to pay the reimbursement undertaking fee is other than the issuing bankC. It need not indicate the latest date for presentation of a claim including any usance periodD. Reimbursement undertaking must require the draft to be drawn on the reimbursing bankSLIDE #50

09. As per UCP 600:A. An issuing bank can ask a claiming bank to provide a certificate of compliance to the reimbursing bankB. Charges of the reimbursing bank should always be borne by the beneficiaryC. An issuing bank is not responsible for paying the confirming bank if the reimbursing bank fails to do soD. Charges of the reimbursing bank are for the issuing bank if the credit is not utilizedSLIDE #51

09. As per UCP 600:A. An issuing bank can ask a claiming bank to provide a certificate of compliance to the reimbursing bankB. Charges of the reimbursing bank should always be borne by the beneficiaryC. An issuing bank is not responsible for paying the confirming bank if the reimbursing bank fails to do soD. Charges of the reimbursing bank are for the issuing bank if the credit is not utilizedSLIDE #52

Article 14 : Standard for Examination of Documents

1. The latest presentation date for a set of documents falls on 14th January 2007(Sunday). The documents presented on 15th January 2007 contain a draft dated 16th January 2007. All other documents are dated on 12thJanuary 2007. Is this acceptable?SLIDE #54

01. The latest presentation date for a set of documents falls on 14th January 2007(Sunday). The documents presented on 15th January 2007 contain a draft dated 16th January 2007. All other documents are dated on 12thJanuary 2007. Is this acceptable?• NoSLIDE #55

02. The Address of the beneficiary as per L/C is “ABC Ltd, 17 Main Street, Adam Square, Country ZZZ”. The beneficiary presented an Invoice evidencing Beneficiary as ”ABC Ltd, 18 McNault Park, Mellonic Town, Country ZZZ”. Is this acceptable?SLIDE #56

02. The Address of the beneficiary as per L/C is “ABC Ltd, 17 Main Street, Adam Square, Country ZZZ”. The beneficiary presented an Invoice evidencing Beneficiary as ”ABC Ltd, 18 McNault Park, Mellonic Town, Country ZZZ”. Is this acceptable?• Acceptable SLIDE #57

03. The address of the Applicant as per L/C is “PQR Ltd, 23 Clark Street, Eve‟s Park, Country YYY”. The Credit called for bill of lading consigned to the applicant.The beneficiary presented a Bill of Lading evidencing Consignee as “PQR Ltd, Belleville Road, Marshal Square, Country YYY”. Is this acceptable?SLIDE #58

03. The address of the Applicant as per L/C is “PQR Ltd, 23 Clark Street, Eve‟s Park, Country YYY”. The Credit called for bill of lading consigned to the applicant.• The beneficiary presented a Bill of Lading evidencing Consignee as “PQR Ltd, Belleville Road, Marshal Square, Country YYY”. Is this acceptable?• Not acceptable SLIDE #59

04. The L/C calls for „Copy Transport Document‟, without stipulating the presentation period. What is the latest presentation date under the L/C? A. 15 days after shipment dateB. 21 days after shipment dateC. L/C expiry dateSLIDE #60

04. The L/C calls for „Copy Transport Document‟, without stipulating the presentation period. What is the latest presentation date under the L/C? A. 15 days after shipment dateB. 21 days after shipment dateC. L/C expiry dateSLIDE #61

05. The L/C calls for a Certificate of Quality. A Document titled „Certificate of Quality‟ evidences the following: “The Gross Weight and Net Weight of the goods are 1000 Kilos.” Is this document acceptable?SLIDE #62

05. The L/C calls for a Certificate of Quality. A Document titled „Certificate of Quality‟ evidences the following: “The Gross Weight and Net Weight of the goods are 1000 Kilos.” Is this document acceptable?No,……………. if the L/C does not stipulate the data content in a document banks will accept the document only if its content appear to fulfill the function of the required document. In this case the document presented is not acceptable because there is no certification regarding quality of goodsSLIDE #63

06. A letter of credit requires a “Certificate of inspection”. The certificate of inspection issued by the beneficiary was presented. Is this acceptable?SLIDE #64

06. A letter of credit requires a “Certificate of inspection”. The certificate of inspection issued by the beneficiary was presented. Is this acceptable?Yes,………… unless the issuer is stipulated in the L/C any party can issue a documentSLIDE #65

07. A letter of credit requires a “Certificate of inspection issued by XYZ Inspection Company”. A certificate of inspection issued by XYZ Inspection Company was presented and it was mentioned that the goods did not pass inspection. Is this acceptable? SLIDE #66

07. A letter of credit requires a “Certificate of inspection issued by XYZ Inspection Company”. A certificate of inspection issued by XYZ Inspection Company was presented and it was mentioned that the goods did not pass inspection. Is this acceptable? Yes,………… unless the content is stipulated in the L/C a document can show any content as long as it fulfils the function of the document.SLIDE #67

08. A Bill of lading presented under a letter of credit evidences beneficiary as shipper, while all other documents evidence another party as shipper. Is this acceptable?SLIDE #68

08. A Bill of lading presented under a letter of credit evidences beneficiary as shipper, while all other documents evidence another party as shipper. Is this acceptable?Yes, …………… consigner / shipper in any document need not be beneficiary of the creditSLIDE #69

09. Can a beneficiary issue a bill of lading in the capacity of a carrier?SLIDE #70

09. Can a beneficiary issue a bill of lading in the capacity of a carrier?Yes, as long as the bill of lading complies with all the requirements of article 20.SLIDE #71

10. True or False?The name of the party indicated as the shipper on any transport document must be the beneficiary named in the credit.• True• FalseSLIDE #72

10. True or False?The name of the party indicated as the shipper on any transport document must be the beneficiary named in the credit.• True• False****As per sub-article 14 (k) of UCP 600… The shipper or consignor of the goods indicated on any document need not be the beneficiary of the credit.SLIDE #73

11. Choose the correct answerDocuments presented but not stipulated in the credit• Will be examined by banks• May be examined by banks• Will not be examined bySLIDE #74

11. Choose the correct answerDocuments presented but not stipulated in the credit• Will be examined by banks• May be examined by banks• Will not be examined by banksAs per sub-article 14(g) of UCP 600 … A document presented but not required by the credit will be disregarded and may be returned to the presenter.SLIDE #75

12. Documents such as 'packing lists' and 'weight lists' must be issued by the beneficiary of the credit.• True• FalseSLIDE #76

12. Documents such as 'packing lists' and 'weight lists' must be issued by the beneficiary of the credit.• True• False****As per sub-article 14(f) of UCP 600 … If a credit requires presentation of a document other than a transport document, insurance document or commercial invoice, without stipulating by whom the document is to be issued or its data content, banks will accept the document as presented if its content appears to fulfil the function of the required document and otherwise complies with sub-article 14 (d).SLIDE #77

13. A confirming bank receives a documentary credit containing the following additional condition: „The carrying vessel must not be older than 15 years‟. Upon receipt of the documents from the beneficiary, the confirming bank MUST:Select one:A. Look for this statement on one of the documents.B. Deem such condition as not stated and disregard it. C. Require the beneficiary to issue a statement of compliance.D. verify the age of the vessel with the carrier or their agent. SLIDE #78

13. A confirming bank receives a documentary credit containing the following additional condition: „The carrying vessel must not be older than 15 years‟. Upon receipt of the documents from the beneficiary, the confirming bank MUST:Select one:A. Look for this statement on one of the documents.B. Deem such condition as not stated and disregard it. C. Require the beneficiary to issue a statement of compliance.D. verify the age of the vessel with the carrier or their agent. ****Article 14h of UCP 600 states that the condition should be disregarded as no documentary evidence is stipulated. SLIDE #79

14. In accordance with UCP 600, which of the following documents, presented on 1 June, is not acceptable under a documentary credit issued on 1 March, expiring on 10 June, with a latest shipment date of 20 May and no stated presentation period?Select one:A. Certificate of origin dated 28 February.B. Third party certificate of quality dated 2 June. C. Weight certificate issued by the beneficiary, dated 15 May. D. Air waybill evidencing third party as consignor, dated 21 May with a notation stating goods shipped on flight number XX123 20 May. SLIDE #80

14. In accordance with UCP 600, which of the following documents, presented on 1 June, is not acceptable under a documentary credit issued on 1 March, expiring on 10 June, with a latest shipment date of 20 May and no stated presentation period?Select one:A. Certificate of origin dated 28 February.B. Third party certificate of quality dated 2 June. C. Weight certificate issued by the beneficiary, dated 15 May. D. Air waybill evidencing third party as consignor, dated 21 May with a notation stating goods shipped on flight number XX123 20 May. ****Article 14i of UCP 600 prohibits documents dated later than the date of presentation. SLIDE #81

Article 15 :Complying Presentation

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Article 16 : Discrepant Documents, Waiver and Notice

1.Refusal to Honour or Negotiate:• When a nominated bank, confirming bank, or issuing bank determines that a presentation does not comply with the credit terms, they have the right to refuse to honour or negotiate the documents.2.Waiver Request:• If the issuing bank identifies discrepancies in the presentation, it may, at its discretion, approach the applicant for a waiver of the discrepancies. This request for a waiver does not extend the time period specified in the UCP 600.3.Notice Requirement:• If a bank decides to refuse to honour or negotiate, it must provide a single notice to the presenter. The notice should include:• Statement of refusal to honour or negotiate.• Details of each discrepancy leading to the refusal.• Actions being taken regarding the documents:- Holding the documents for further instructions.- Holding the documents pending a waiver from the applicant.- Returning the documents.- Acting in accordance with previous instructions.• The notice must be sent by telecommunication or other expeditious means no later than the fifth banking day following the day of presentation.SLIDE #85Summary Article 16 : Discrepant Documents, Waiver and Notice

4.Document Return:• After providing the required notice, the bank may return the documents to the presenter at any time.5.Consequences of Non-Compliance:• If an issuing bank or confirming bank fails to adhere to the provisions of Article 16, they cannot later claim that the documents do not constitute a complying presentation.6.Refund Entitlement:• If an issuing bank or confirming bank refuses to honour or negotiate and has given the required notice, they are entitled to claim a refund, along with interest, of any reimbursement made.In summary,• Article 16 of UCP 600 establishes the procedures for handling non-compliant documents, requesting waivers, providing notices of refusal, and the subsequent actions and entitlements of banks in international trade finance transactions. These guidelines help ensure transparency, efficiency, and compliance with the terms of the credit.SLIDE #86Summary Article 16 : Discrepant Documents, Waiver and Notice

1. A refusal message was sent by the issuing bank as follows: “We are holding documents at your disposal. Meanwhile we are contacting the applicant for waiver of discrepancies. If we obtain waiver from the applicant prior to the receipt of your instructions to the contrary, we will release the documents to the applicant”. Is the refusal valid?SLIDE #87

01. A refusal message was sent by the issuing bank as follows: “We are holding documents at your disposal. Meanwhile we are contacting the applicant for waiver of discrepancies. If we obtain waiver from the applicant prior to the receipt of your instructions to the contrary, we will release the documents to the applicant”. Is the refusal valid?• No, …………….The refusal does not list the discrepancies.SLIDE #88

02. An issuing bank that refused documents under an L/C referred the same to the applicant who accepted the discrepancies. Is the issuing bank obliged to make payment?SLIDE #89

02. An issuing bank that refused documents under an L/C referred the same to the applicant who accepted the discrepancies. Is the issuing bank obliged to make payment?• No,………. Issuing bank the right to reject discrepant documents even if the discrepancies are accepted by the applicantSLIDE #90

03. Documents are received by the Issuing Bank on 04 Dec 2006 (Monday). What is the Latest Date for the Issuing Bank to communicate its acceptance or rejection of documents,SLIDE #91

03. Documents are received by the Issuing Bank on 04 Dec 2006 (Monday). What is the Latest Date for the Issuing Bank to communicate its acceptance or rejection of documents,• As per UCP 600…….. (Assume that there are no Bank Holidays except for Saturday and Sunday) As per UCP 600, 11 Dec 2006SLIDE #92

04. A credit calls for an “Original Invoice”. The invoice presented is issued on the original stationery of the beneficiary without any signature or original stamp. Is this acceptable?SLIDE #93

04. A credit calls for an “Original Invoice”. The invoice presented is issued on the original stationery of the beneficiary without any signature or original stamp. Is this acceptable?Yes,…………. a document issued on original stationery will be considered as an original.SLIDE #94

05. A letter of credit calls for a “Certificate of Origin” in “one copy”. Can a copy of the certificate of origin be presented?SLIDE #95

05. A letter of credit calls for a “Certificate of Origin” in “one copy”. Can a copy of the certificate of origin be presented?• No,……….. Unless otherwise specified at least one original of each stipulated document must be presentedSLIDE #96

06. Bank I (the issuing bank) received documents on 11 March XX (Tuesday) and found the documents to be discrepant. Which of the following notices sent by Bank I is / are valid? (Saturdays and Sundays are bank holidays)A. MT 799 sent on 14 March XX “We received your documents presented under our LC. However we refuse to pay as the documents are discrepant. Meanwhile we are holding the documents at your disposalB. MT 799 sent on 18 March XX “We refuse your presentation as the documents contain the following discrepancies: Late shipment, Partial shipment. We are returning the documents to you by courierC. MT 799 sent on 13 March XX “We have found that the documents contain discrepancy late shipment. We will effect payment when documents are accepted by the applicant”D. MT 799 sent on 19 March XX “We refuse payment as the documents contain the discrepancy late shipment. We are holding documents at your risk and disposalSLIDE #97

06. Bank I (the issuing bank) received documents on 11 March XX (Tuesday) and found the documents to be discrepant. Which of the following notices sent by Bank I is / are valid? (Saturdays and Sundays are bank holidays)A. MT 799 sent on 14 March XX “We received your documents presented under our LC. However we refuse to pay as the documents are discrepant. Meanwhile we are holding the documents at your disposalB. MT 799 sent on 18 March XX “We refuse your presentation as the documents contain the following discrepancies: Late shipment, Partial shipment. We are returning the documents to you by courierC. MT 799 sent on 13 March XX “We have found that the documents contain discrepancy late shipment. We will effect payment when documents are accepted by the applicant”D. MT 799 sent on 19 March XX “We refuse payment as the documents contain the discrepancy late shipment. We are holding documents at your risk and disposalSLIDE #98

07. As a nominated bank, which of these should be followed while handling pending dishonored documents?I. The documents should be held at the disposal of the applicantII. The documents should be securely storedIII. The presenter needs to be informed at regular intervalsIV. The presenter need not be informed at regular intervalsOptions:A. I and IIB. I and IIIC. II and IIID. II and IVSLIDE #99

07. As a nominated bank, which of these should be followed while handling pending dishonored documents?I. The documents should be held at the disposal of the applicantII. The documents should be securely storedIII. The presenter needs to be informed at regular intervalsIV. The presenter need not be informed at regular intervalsOptions:A. I and IIB. I and IIIC. II and IIID. II and IVSLIDE #100

08. Discrepant documents under a LC are received by the nominated bank. The nominated bank requests the issuing bank for authority to pay. Which of the following is the BEST course of action for the issuing bank?A. If the discrepancies are acceptable to the issuing bank, the issuing bank need not refer the discrepancies to the applicantB. The issuing bank should refer the discrepancies to the applicant for their approvalC. The issuing bank must reply to the nominated bank within 5 banking days following the date of receipt of such requestD. An issuing bank need not check documents for compliance if it authorizes the nominated bank to paySLIDE #101

08. Discrepant documents under a LC are received by the nominated bank. The nominated bank requests the issuing bank for authority to pay. Which of the following is the BEST course of action for the issuing bank?A. If the discrepancies are acceptable to the issuing bank, the issuing bank need not refer the discrepancies to the applicantB. The issuing bank should refer the discrepancies to the applicant for their approvalC. The issuing bank must reply to the nominated bank within 5 banking days following the date of receipt of such requestD. An issuing bank need not check documents for compliance if it authorizes the nominated bank to paySLIDE #102

09. An issuing bank notices that the B/L is not signed as per UCP and seeks a waiver from the applicant. The applicant waives the discrepancy. The issuing bank then notices that the applicant does not have sufficient funds in their account to settle the drawing. Which of the following is TRUE?A. The issuing bank is obliged to pay since the applicant has waived the discrepanciesB. The issuing bank can send a refusal for the documentsC. The issuing bank is obliged to pay if the nominated bank has negotiated the documents and paid the beneficiaryD. The issuing bank should pay only up to the amount of funds that is available in applicant‟s accountSLIDE #103

09. An issuing bank notices that the B/L is not signed as per UCP and seeks a waiver from the applicant. The applicant waives the discrepancy. The issuing bank then notices that the applicant does not have sufficient funds in their account to settle the drawing. Which of the following is TRUE?A. The issuing bank is obliged to pay since the applicant has waived the discrepanciesB. The issuing bank can send a refusal for the documentsC. The issuing bank is obliged to pay if the nominated bank has negotiated the documents and paid the beneficiaryD. The issuing bank should pay only up to the amount of funds that is available in applicant‟s accountSLIDE #104

11. True or false?Under UCP 600, when an issuing bank determines that a presentation does not comply, prior to providing a notice of refusal, it may contact the applicant for a waiver of the discrepancies and the applicant will have a period of 5 business days in which to provide the waiver.• True• FalseSLIDE #105

11. True or false?Under UCP 600, when an issuing bank determines that a presentation does not comply, prior to providing a notice of refusal, it may contact the applicant for a waiver of the discrepancies and the applicant will have a period of 5 business days in which to provide the waiver.• True• False****As per sub-article 16(b) of UCP 600 … When an issuing bank determines that a presentation does not comply, it may in its sole judgement approach the applicant for a waiver of the discrepancies. This does not, however, extend the period mentioned in sub-article 14 (b). SLIDE #106

12. Documents have been examined by an issuing bank and discrepancies noted. When approached by the issuing bank, the applicant refused to authorise a waiver of the discrepancies. Which of the following is NOT a requirement in respect of the issuing bank's notice of refusal to the presenting bank?Select one:A. To indicate each discrepancy upon which refusal is based.B. To indicate that the applicant declined to waive the discrepancies. C. To state that the documents are being held pending further instructions from the presenter.D. To ensure that it is sent no later than close of business, five banking days after the date of presentation of the documents. SLIDE #107

12. Documents have been examined by an issuing bank and discrepancies noted. When approached by the issuing bank, the applicant refused to authorise a waiver of the discrepancies. Which of the following is NOT a requirement in respect of the issuing bank's notice of refusal to the presenting bank?Select one:A. To indicate each discrepancy upon which refusal is based.B. To indicate that the applicant declined to waive the discrepancies. C. To state that the documents are being held pending further instructions from the presenter.D. To ensure that it is sent no later than close of business, five banking days after the date of presentation of the documents. ****Correct answer. Article 16c defines the mandatory context for a refusal notice. Confirming that the applicant has declined to provide a waiver is not one of the requirements. SLIDE #108

13. How should a bank communicate its decision to refuse to honor or negotiate a presentation, and what information must be included in the notice?• Answer: The bank must provide a single notice to the presenter by telecommunication or other expeditious means within five banking days of the presentation. The notice must state the refusal to honor or negotiate, detail each discrepancy, and specify the actions being taken with the documents.14. What entitlement does an issuing bank or confirming bank have if they refuse to honor or negotiate and provide the required notice in accordance with UCP 600 - Article 16?• Answer: If an issuing bank or confirming bank refuses to honor or negotiate and gives the necessary notice, they are entitled to claim a refund with interest of any reimbursement made..SLIDE #109

15. How does the UCP 600 address the situation where an issuing bank identifies discrepancies in a presentation but still wants to proceed with the transaction?• Answer: The issuing bank may, at its discretion, approach the applicant for a waiver of the discrepancies. However, this waiver request does not extend the time period specified in the UCP 600.16. What consequences do issuing banks or confirming banks face if they fail to act in accordance with the provisions of UCP 600 - Article 16?• Answer: If an issuing bank or confirming bank fails to comply with the provisions of Article 16, they are precluded from claiming that the documents do not constitute a complying presentation.SLIDE #110