CE Trade Documentation & Payment Methods 2

Question 1

A U.S. exporter ships goods to Brazil under a letter of credit requiring a 'clean on board' bill of lading. The shipping company notes a damaged carton on the B/L. What is the result?

Accepted Answer

The B/L becomes a 'claused' or 'foul' document and the bank will likely reject it

Answer

A 'clean on board' LC requirement means the B/L must show no damage notation; any exception clause makes it a foul B/L that banks will reject.

Question 2

Which Incoterm places the MAXIMUM responsibility on the seller, including delivery to the buyer's named destination with import duties paid?

Accepted Answer

DDP (Delivered Duty Paid)

Answer

Under DDP, the seller is responsible for all costs and risks including import customs clearance and duties at the named destination.

Question 3

An exporter receives a documentary collection instruction marked 'D/P' (Documents against Payment). When should the buyer receive the shipping documents?

Accepted Answer

Only after making full payment to the collecting bank

Answer

Under D/P (sight draft), the buyer must pay the full amount to the collecting bank before receiving the documents needed to claim the goods.

Question 4

What is the primary purpose of a Shipper's Export Declaration (now AES filing) in U.S. export transactions?

Accepted Answer

To collect export trade statistics and enforce export controls

Answer

The AES (Automated Export System) filing, which replaced the SED, is required by the U.S. Census Bureau to collect trade statistics and by BIS to enforce export controls.

Question 5

Under UCP 600 rules governing letters of credit, how many banking days does an issuing bank have to examine documents and decide to honor or refuse?

Accepted Answer

5 banking days

Answer

UCP 600 Article 14 gives banks a maximum of 5 banking days following the day of presentation to examine documents and determine compliance.

(CE) Certified Exporter Practice Test

(CE) Certified Exporter Practice Test

CE Trade Documentation & Payment Methods 2