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Exam 5: The Documentary Sale and Terms of Trade

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Question 31

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The trade terms "FOB" and "CIF" are defined by which of the following:

A) Incoterms.
B) Uniform Commercial Code.
C) The Revised American Foreign Trade Definitions.
D) All of these are correct.

E) B) and C)
F) B) and D)

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Question 32

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Shipment contracts are more common in international trade than destination contracts.

A) True
B) False

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Question 33

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In a documentary sales transaction,financial responsibility for lost or damaged goods is always negotiated once the loss or damage occurs and not before.

Under an FOB contract,the seller delivery's the goods on board the ship decks and has no further transportation obligations.

Negotiable bill of lading is proof of title allow for the transfer of the title to the goods without requiring the owner to take possession of the goods.

Another term in lieu for a negotiable bill of lading is a documentary draft.

A straight bill of lading assures that the goods have actually been loaded on board for shipment.

The Incoterms definitions will automatically become a part of a contract for the sale of goods,governed by the UN Convention for the International Sale of Goods.

An importer in Germany requests a price quotation from a cotton broker in Memphis.The broker wishes to place the cotton in the hands of a multimodal terminal operator in Memphis for shipment through the port of New Orleans.He will pay the freight charges through to the German seaport,but he wishes the risk of loss to the cotton to pass to the German importer as soon as he places the cotton in the hands of the multimodal terminal operator in Memphis.The broker should quote his prices for the cotton:

The documentary letter of credit transaction serves as a means to assure the buyer and seller that the transaction is secured.

Air waybills are non-negotiable and delivery will be made only to the consignee.

When a party takes a negotiable document as a good faith purchaser,it generally acquires even greater rights in the document than the one from whom it had been negotiated.

A carrier is entitled to release a shipment covered by a negotiable bill of lading to a holder in possession of a clean copy of the bill of lading only if the holder also presents a written guarantee of ownership.

The documentary collection is the process by which:

A sale made "CIF foreign port" implies that the terms of the sale are:

When goods are to be transported by more than one mode of transportation,the transportation is:

International commercial terms are used in all international contracts for the sale of goods.

Bills of lading are meant to be:

In Basse and Selve v.Bank of Autralasia,the seller submitted a phony sample of ore to an inspection company to obtain a Certificate of Analysis showing high- grade ore.On the basis of the certificate,the seller paid for the documents and took delivery of the ore.The ore turned out to be worthless.The court ruled that:

According to Incoterms,the risk of loss under contract terms "FAS Name of Vessel" passes to the buyer when the goods are delivered alongside the named vessel.