外贸实务英语课程习题与测试题

外贸实务英语课程习题与测试题

I. Answer the following questions.

1. 2. 3. 4. 5.

How would you define international trade?

What are the reasons for international trade? Can you list some of them? What is economies of scale? Why does it influence international trade? How do countries benefit from the international trade?

What are the differences between visible trade and invisible trade? Give a few examples of invisible trade.

6. What do you think of the trade of balance?

7. What do trade barriers mean? List some example of trade barriers in international

trade.

8. How is international trade regulated now?

9. What do trade forms refer to? List some examples of trade forms.

10. What can agents be divided into according to the scope of their rights? 11. What are the differences between agency and distribution?

12. What is the basic characteristic of countertrade? What are the common reasons

for countertrade?

13. Explain compensation trade.

14. What are the differences between compensation trade and counterpurchase? 15. What are the differences between exportation and consignment? 16. How is the price decided in bidding?

17. How can you define trade terms? What are the functions of trade terms? 18. What are the trade terms under Incoterms 2000?

19. What are the main differences between CFR and CIF? 20. Why are “C”-terms different from all other terms?

21. What are the characteristics of “D”-terms under Incoterms2000?

22. Which trade terms under Incoterms 2000 can be applied to water transport? 23. Try to compare the differences between FOB, CFR, CIF and FCA, CPT, CIP. 24. How can we choose a proper trade term?

25. Why shall we stipulate the name of commodity in a contract clearly? 26. What are the ways of showing quality of commodity in a contract? 27. How can we stipulate “sale by sample” in a contract? 28. What are FAQ and GMQ?

29. What are the ways of measurement for goods in international trade?

30. Why shall we include a “more or less clause” in a contract? How to stipulate it in

a contract?

31. What are the functions of packing in international trade?

32. How can we decide which type of packing should be used in a business

transaction?

33. What modes of transport are usually used in international trade? 34. Why is container transport popular in international trade? 35. What is international multimodal transport?

36. How can we stipulate time of shipment in a contract?

37. If different ports of destination are stipulated in a CFR contract, what shall the

seller pay more attention to?

38. What shall be included in a shipping notice?

39. How can we stipulate partial shipment clause for the advantages of the exporter? 40. If there is no direct sail to port of destination, how should we stipulate the

shipping clause?

41. What are the differences of General Average and Particular Average? 42. What is the coverage of marine insurance under CIC? 43. What is All Risks under CIC?

44. How do we take out additional coverage?

45. How do we choose proper insurance coverage?

46. Is the same coverage of ocean marine insurance used for land transport? If not,

what insurance coverage is for land transport?

47. What are the differences between insurance policy and insurance certificate? 48. What are the characteristics of an open policy?

49. What factors shall be taken into consideration when pricing in international trade? 50. What are included in a unit price clause? 51. What are the functions of price terms?

52. What is the relationship between money of account and money of payment? 53. Is hard currency as money of payment more favorable to the exporter? Why? 54. Why does exchange rate influence international trade greatly? 55. What are commission and discount? How can they affect price?

56. Give one example for commission-included price and discount-included price

respectively.

57. What is the main advantage of L/C? 58. What are the types of L/C?

59. What are the instruments of payment commonly used for international trade? 60. Please describe D/A and D/P.

61. Under what conditions can collection be used in international trade? 62. What is a draft?

63. How can we decide which term of payment we shall use?

64. Arrange the order of terms of payment mentioned in the text as far as the seller’s

benefit is concerned.

65. What are the ways to stipulate the place and time of inspection? 66. How does one decide the place and time of inspection?

67. Why should a penalty clause be included in a contract sometimes? 68. How can one settle the claims?

69. What is force majeure? And how does it influence the international trade? 70. What is arbitration? And what will be included in an arbitration clause? 71. What is the force of an arbitration award? 72. Who will bear the arbitration fee?

73. Why is it necessary to examine L/C and make amendment to L/C? 74. What are the parties involved in an L/C?

75. What is the relationship of opening bank and advising bank?

76. Why shall the seller notify the buyer to apply for the opening of L/C sometimes? 77. How can the buyer apply for the opening of L/C?

78. What are the emphasis of examination of L/C for both the banks and the trade

company?

79. What is the process of amendment to L/C? 80. Who will bear the fee of amendment to L/C?

81. Why is inspection of commodity necessary in international trade? 82. What are the three standards for commodity inspection? 83. Explain the mechanics of inspection in China briefly.

84. What aspects does inspection on import and export commodities cover? 85. How shall the exported commodity be inspected? 86. How shall the imported commodity be inspected?

87. How to inspect a complete set of equipment in large size when importing them? 88. What can inspection certificates be used for? 89. What is the role of forwarding agents?

90. What are the procedures of arranging shipment? 91. What factors will influence freight rate?

92. How can the freight rates for liners be marked with? 93. What does open rate mean?

94. What are the different transport documents for different modes of transport? 95. What is a “Clean on board, to order, blank endorsed B/L”? 96. What shall be considered when arranging shipment? 97. What factors will influence the insurance coverage?

98. What shall the buyer note if the seller takes out insurance under CIF and CIP? 99. How to fix the insured amount?

100.What factors will influence the premium rate?

101.What are the advantages of using an open policy for importers? 102.What should the insured pay attention to when apply for insurance? 103.Why is sea protest needed when filing a claim? 104.How to protect the interests of insurer?

105.How does the China Customs examine the goods entering and leaving China? 106.What is over-landed cargo? How to deal with such cargoes? 107.What is over- carried cargo? How to deal with such cargoes? 108.What is the function of a shipping order and a Bill of Lading? 109.Why is damaged cargo a matter of interest to the customs? 110.Explain general rates and preferential rates. 111.How does the customs make customs valuation?

112.How does the customs deal with it in the case that the duties are short-levied or

over-levied?

113.Why is documentation important in international trade?

114.What are the four major types of documents classified by ICC? 115.What are the requirements for exporting documents? 116.What are the procedures for payment under L/C?

117.Why is documentation especially important under L/C payment? 118.What documents may be needed for payment under L/C?

119.What discrepancies should be avoided about draft for payment? 120.What are the points to check the bill of lading?

121.What may the disputes be about in international trade? 122.What are the ways of settling disputes?

123.What shall be noted when settling disputes through a third party?

124.Why is arbitration commonly used in settlement of international trade disputes? 125.What are the procedures for arbitration? 126.How to execute the arbitral award? 127.What does market claim mean?

128.What shall be noted when handling the disputes in international trade?

II. True or false questions.

1. International trade is only the exchange of goods between nations.

2. Countries trade with each other partly because there is a cost advantage.

3. Trade means countries can provide a wider variety of products for their consumers.

4. International trade can greatly expend the market, which enables the suppliers to take advantage of economies of scale.

5. Exchange rate fluctuations may create many problems for international trade.

6. Still in some cases, political reasons can outweigh economic considerations between countries.

7. When we provide shipping insurance service for foreigners, it can be seen as an example of invisible trade.

8. Trade surplus means that a country’s imports exceed its exports. 9. Tariff and quotas are the examples of trade barriers.

10. Countries can do business freely without regulations in international trade.

11. Trade forms include both direct ones like exportation and importation and indirect ones like agency and distribution.

12. An agent needs to carry stock as a distributor does.

13. Under the trade form of agency, the principal sets the retail price, retains title and controls the goods.

14. There is no contractual relationship between the principal and the customers under trade form of agent.

15. The distributor gains profits from the price difference at which he buys and resells the goods.

16. Countertrade means the exchange of goods for goods.

17. Under partial compensation, the export is paid both by goods and by cash.

18. In counterpurchase, the value of countertrade goods has to equal that of the export.

19. The goods exported on the consignment remain the title to the exporter.

20. The clearing units are available for the purchase of goods from both the creditor

country and the debtor country in switch trade.

21. All international business transactions are done under Incoterms 2000.

22. Trade terms can be called price terms because they stand for the price component. 23. EXW in Incoterms 2000 is the trade term under which the obligations and costs borne by and risks of the seller are minimum.

24. Under FCA in Incoterms 2000, the risk of loss of or damage to the goods is transferred from the seller to the buyer at the time the buyer accepts the goods. 25. Generally speaking, under FOB in Incoterms 2000, it is the seller’s responsibility to apply for the export license and pay the export duty.

26. Under FOB San Francisco, San Francisco is the port of destination. 27. Under CIF, cargo insurance is to be effected by the buyer.

28. The buyer has more responsibilities, costs and risks when using FOB than using CIF.

29. The “D”-terms mean arrival contracts, while the “C”-terms evidence departure (shipment) contracts.

30. The DDP should not be used if the seller is unable to obtain import license directly or indirectly.

31. Different commodities have different qualities, but the same commodity must have the same quality.

32. A term for defining one particular degree of quality in one country may have quite a different meaning in another country.

33. Whether sale by buyer’s sample or by seller’s sample, the quality of the commodities should be strictly same as sample. Otherwise, it should be stipulated in the contract clearly.

34. The grade of the same product is always the same in different countries.

35. Different ways of measurement such as by weight, by length, by area, by volume and by capacity may be used for different products.

36. In reality, the quantity of goods shipped must be exactly the same with that stipulated in the contract.

37. Packing can only serve as a form of protection.

38. Packing should be designed according to the need of the cargo.

39. Generally speaking, more packing is required for containerized consignments. 40. Bulk cargoes require little packing.

41. Sea transport is the most important mode of transport in international trade now. 42. The freight of liners is relatively fixed, while the freight of tramps is mainly determined by the market.

43. Multimodal transport means the goods are carried by at least two modes of transport under at least two multimodal transport operators.

44. Time of shipment in a contract can only be a fixed period of time.

45. If optional ports of destination are stipulated in the contract, the extra freight due to selecting port of destination must be paid by the importer.

46. The notice of shipment under CFR is very important, because the buyer will take out insurance upon receipt of the notice.

47. Partial shipment means that the goods under one contract are shipped in different

c. An agent acts as a middleman between the principal and the customer

d. An agent can operate out of the marketing area authorized by the principal. 12. Which is wrong about the differences between agency and distribution? ______ a. A distributor buys from the principals. b. A distributor takes title to the goods.

c. Under distribution, there is no contractual relationship between the principal and the customers.

d. A distributor gains the profit from commission.

13. Who has the exclusive right of selling the goods in a marketing area at the price he fixes? __________

a. Consignor b. Exclusive distributor c. Exclusive agent d. bidder

14. As to the exclusive agent and exclusive distributor, which is correct? ___________

a. The former is sales relationship, the later is agency relationship. b. The former is agency relationship, the later is sales relationship. c. They both are agency relationship. d. They both are sales relationship.

15. Which description of exclusive sales is correct? ____________

a．Both exclusive distributor and exclusive agent have exclusive operating right. b．Both exclusive distributor and exclusive agent can decide the prices of goods. c．Both exclusive distributor and exclusive agent have the ownership of goods. d．Both exclusive distributor and exclusive agent do the business for commission. 16. In international trade, the goods exported are “paid for” by a countersupply of goods and the value of the countertrade goods is equal to that of the export goods. We called this__________

a. full compensation b. switch trade c. counterpurchase c．consignment

17. In international trade, the seller ships the goods to the buyer when there is no purchase made. The seller retains title to the goods until the buyer has sold them. This is __________

a. bidding b. agency c. consignment d. auction

18. As to consignment，the ownership of goods belongs to the __________ a. agent b. consignee c. consignor d. distributor 19. Which description of consignment is correct? __________ a. Consignee can sell the goods according to his own will b. It is a spot transaction with real goods

c. The relation between the consignor and consignees is sale relationship

d. All expenses and risks of goods are undertaken by consignor before the goods are sold.

20. How is the price in bidding decided? __________ a. By the buyers b. By the offers c. By the sellers

d. By choosing the most advantageous one from the offers of bidders.

21. The trade terms define the responsibilities and expenses of ____

a. both the seller and the buyer b. both the consignee and the consignor c. both the shipper and carrier d. both the exporter and the operator

22. Under______, the seller minimizes his obligations while the buyer obtains the goods at the lowest possible price.

a. FOB b. DDP c. DES d. EXW

23. When the seller pays for the goods to be placed alongside the vessel at the named port of shipment, the term is __________

a. DEQ b. FAS c. FOB d. EXW

24. When the seller pays for the goods to be loaded on board the ship, but does not pay the freight or insurance, the right term is _______

a. FOB b. FCA c. CFR d. CIF

25. When the seller only pays freight for the goods up to arrival at the port of destination, the term is _________

a. FOB b. CFR c. DDU d. CIF

26. When the seller pays for the cost of transport and the cost of insurance to a destination, and he includes these expenses in his sales price, the term is ___________

a. DDU b. CIP c. CPT d. CFR 27. ________ may be used for various modes of transport. a. FCA CPT CIP b. FCA FOB EXW c. FCA FAS CIF d. FCA CFR CPT 28. ________ can only be used for waterway transport.

a. CIF CIP DEQ b. CFR CPT CIP c. FOB CPT CIF d. CIF FOB DEQ

29. Under ____ trade terms, the risk is transferred from the seller to the buyer when goods pass over the ship’s rail.

a. FCA FOB FAS b. FOB CFR CIF c. FAS FCA CIF d. FAS CFR FOB 30. The buyer has the minimum obligation under_____.

a. DDU b. DDP c. DAF d. DEQ

41. While sales by sample, if there is no other stipulations on the goods in the contract , then the goods __________.

a. may be roughly the same as the sample b. must be the same as the sample

c. may have reasonable tolerance d. may have reasonable differences on specification

42. The sample made by the seller according to the buyer’s, and then sent to and confirmed by the buyer is called __________. a. duplicate sample b. returning sample c. original sample d. counter sample

43. __________ are usually sold by sale by trade mark or brand name? a. Manufactured goods with steady quality b. Raw materials

c. Machine and instrument d. Goods with special shape

44. The methods commonly used to express the quality include the followings except for __________.

a. sale by sample b. sale by materials

c. sale by description d. sale by trade mark or brand name

45. In international trade, the goods that is demanded on special shape or the characteristics of color and taste should be sold__________. a. by sample b. by specification c. by grade d. by name of origin 46. Quality standard of FAQ means that__________.

a. the goods is suitable for sales b. the goods is merchantable

c. the goods has bad quality d. the goods has fair average quality 47. At present, which method we always take to express quality when we export some handicrafts, clothing and light industrial products? __________ a. Sale by sample b. Sale by specification c. Sale by grade d. Sale by name of origin

48. If there is a quality tolerance clause in a contract, within the range of the tolerance, the buyer__________.

a. can’t refuse to accept the goods b. can refuse to accept the goods c. can demand the price to be adjusted

d. can refuse to accept the goods or demand the price to be adjusted

49. A company exports 50 tons of wheat, the seller delivers the extra 2 tons, then the buyer should __________.

a. accept 52 tons b. refuse to take 52 tons

c. accept extra 1 ton d. refuse to accept extra 2 tons 50. The more or less clause is normally used for ________

a. bulk goods b. packed units c. individual items d. containerized goods 51. The characteristics of liner transport are that ________.

a．the line, the port, the time and the freight rate are fixed b．its freight is determined by the market.

c．the variety and quantity of goods shipped are more flexible

d．the obligations and rights of both seller and buyer are stipulated in the B/L 52. _______ transport is a major mode of transport in terms of capacity, only second to sea transport.

a. Road b. Air c. Container d. Rail

53. ________ transport has a high distributive ability of offering a door-to-door service.

a. Air b. Road c. Sea d. Inland waterway

54. In container transport situation, the shipping company can supply “door to door” service according to the condition of __________

a. FCL/FCL b. FCL/LCL c. LCL/FCL d. LCL/LCL

55. The operator who signs the multimodal transport documents is__________

a. only responsible for the first stage of the transportation b. must be responsible for the whole transportation c. is not responsible for transportation

d. is only responsible for the last stage of the transportation

56. Which stipulation of the date of shipment is often used in a contract? __________ a. one day b. within several days after the L/C has been received c. prompt shipment d. concrete shipment time

57. Which of the following is right about the stipulation of the port of shipment and the port of destination clauses in the international trade contract?_______ a．To stipulate two ports roughly

b．Only one port of shipment and one port of destination can be stipulated in the contract.

c．To stipulate two ports of shipment or two ports of destination

d．More than one port is contracted to be port of loading or more than one port is contracted to be port of destination in case it is difficult to decide.

58. The seller usually sends the _____ to the buyer immediately after the goods are loaded on board the ship, advising him of the shipment.

a. shipping advice b. shipping instructions c. shipping date d. shipping port 59. Partial shipment may be necessary when ___________ a. direct liners are not available

b. the amount of the cargo is very small c. the shipping date is very close

d. the export covers a large amount of goods

60. Transshipment may be necessary when ___________ a. direct liners are not available

b. the amount of the cargo is very small c. the shipping date is very close

d. the export covers a large amount of goods

61. __________ is the practice of sharing among many persons risks that would otherwise be suffered by only a few.

a. Trade b. Transportation c. Insurance d. Description

62. The losses done to the goods in marine transportation can be classified into two types, namely__________

a. actual total loss and constructive total loss b. general average and particular average c. basic loss and additional loss d. total loss and partial loss

63. In the marine cargo insurance practice, general average is__________ a. a kind of partial loss b. a kind of total loss

c. partial loss or total loss decided by the time d. constructive total loss

64. For exporting rice, the goods can not be used according to its original usage because of its having been soaked by the sea water for a long time owing to the

accident, as a result, the goods has to be sold at a lower price at the destination. the loss herein is __________

a. particular average b. general average c. actual total Loss d. constructive total loss

65. WPA was covered for exporting goods, and part of the goods was damaged because of the rain on the way, then the insurance company should __________ a. compensate for the whole lot

b. compensate for the part damaged c. compensate for none

d. compensate for all the exporting goods

66. Exporting clothes are soaked heavily because of the ship hitting the submerged reef in the sea, if the cost dealt with and sent to the destination is more than the value insured, then the loss can be regarded as __________ a. general average b. actual total loss c. constructive total loss d. particular average

67. The goods concluded on the CIF basis has been burnt because of the fire after being loaded , then __________

a. the loss is due to the seller

b. the seller asks the insurance company for compensation

c. the buyer asks the insurance company for compensation d. the loss is due to the party who pays the freight 68. Particular additional coverage of CIC _________ a. can be covered alone b. can’t be covered alone

c. can be covered alone when more than two of them are covered

d. can be covered alone when only one of the insured applies for insurance 69. Under CIC, general additional risks include the following except for_________ a. Risk of Shortage b. TPND c. Failure to delivery d. Risk of odor

70. Basic coverage of marine cargo insurance under CIC includes the following except for________

a. FPA b. War Risk c. WPA d. All Risks 71. Total cost of exporting includes ____________ a. production cost b. sales price

c. production cost and all charge before exporting

d. production cost, all charge and taxes before exporting

72. Which one is the best expression of unit price for international trade? __________

a. CIF LONDON US$1010/MT b. CIF LONDON $1,010.00/MT c. CIF LONDON US$1,010.00/MT d. CIF LONDON $1,010.00/TON 73. The seller reduces the price by a certain percentage of the original price for the buyer, that’s to say, the seller does proper favor in price for the buyer. The favor is called__________

a. commission b. discount c. advance payment d. deposit

74. While choosing the money for the payment in international trade, one should __________

a. choose hard money b. choose soft money

c. choose soft money for export and hard money for import d. choose hard money for export and soft money when import

75. In international trade, the method of calculating plain commission is__________ a. net price multiply by commission rate

b. commission-included price multiplied by commission rate c. net price divided by（one minus commission rate） d. unit price multiplied by commission rate

76. In international trade, the commission is usually collected by __________ a. the seller b. the buyer c. the insurance company d. the intermediary 77. Which one is the price including commission__________ a. FOBS b. FOBT c. FOBST d. FOBC 78. Which one of the following quotation is wrong? __________

a. FOB QINGDAO USD10.00/PC b. CIF LIVERPOOL GBP125.00/MT c. FOB SHANGHAI $15.25/PC d. FOB JINAN USD2.00/KG 79. The followings are included in CFR and CPT prices expect for __________ a. production cost b. freight c. insurance premium d. profit

80. If the unit price clause is stipulated as “USD 200 per metric ton CIF London less 3% discount”. Then the price is called a/an _________

a. net price b. commission-included price b. discount-included price d. discount-excluded price

81. Which one of the following is not the means of remittance? __________ a. L/G b. M/T c. T/T d. D/D 82. T/T means __________

a. mail transfer b. telegraphic transfer c. demand draft d. letter of credit

83. Which means of international payment is a kind of bank credit? __________ a. Remittance b. Collection c. L/C d. D/D 84. Which L/C means double guarantee for the beneficiary? __________ a. Revocable L/C b. Documentary L/C c. Confirmed L/C d. Transferable L/C

85. As to confirmed L/C, the payment responsibility of confirming bank is ______ a. primary b. secondary c. third d. fourth

86. There is a draft whose drawer and drawee are both bankers. Which one is it in the followings? __________

a. Commercial Draft b. Banker’s Draft c. Clean Draft d. Documentary Draft 87. A Check is a kind of ____ drawn on a banker.

a. sight draft b. time draft

c. sight promissory note d. time promissory note 88. D/P at sight means__________

a. document against payment after sight b. document against payment at sight c. documentary collection d. document against acceptance

89. As to the seller, the risk of D/P, D/A and L/C can be arranged (from great to small) as followings: __________

a. D/A, D/P and L/C b. L/C, D/P and D/A c. D/P, D/A and L/C d. D/A, L/C and D/P

90. In the following terms of settlement, which is the most risky one for the seller? __________

a. T/T in advance b. D/A c. D/P at sight d. D/P after sight 91. “Shipping Weight and Landed Quality” means__________ a. to make inspection at the port/place of destination b. to make inspection at the port/place of destination

c. to make inspection in the exporting country and make reinspection in the importing country.

d. to make inspection at the port/place of shipment to take shipped weight as final and make reinspection at the port/place of destination to make take landed quality as final.

92. Among those inspection methods, the most commonly used one is______ a. to make inspection at the port of shipment b. to make inspection at the port of destination

c. to make inspection in the exporting country and make reinspection in the importing country.

d. to make inspection at the port of shipment to take shipped weight as final and make reinspection at the port of destination to make take landed quality as final. 93. An exporter delivered the goods according to the stipulation of contract, and submitted clean B/L to the importer. After receiving the goods, the importer found that the goods are damaged because of the damage to the outside packing. There is also a sea protest showing that the damage is due to heavy weather. Whom should the importer claim to? __________

a. Shipping company b. Insurance company c. Seller d. Buyer

94. When__________ happens, the party that fails to perform the contract is allowed to relieve liabilities of the non-performance.

a. war b. world market price goes up c. manufacture fault d. currency devaluation

95. In international commodity sales, the commonly used way to stipulate force majeure clause is __________

a. in a general way b. without stipulation c. in a way to list the scope d. in a comprehensive way

96. The necessary condition of settling disputes through arbitration is that __________

a. the seller and buyer have an arbitration agreement or an arbitration clause in the

contract

b. the seller and buyer have contract

c. the case can’t be settled through conciliation d. one party comes to nothing through litigation

97. Which descriptions of arbitration award are not correct? __________ a. The award is usually final.

b. The seller or buyer can sue in a law court about the award.

c. If the award is not executed by one party, the other may ask the competent court to enforce it.

d. The award is binding upon both parties.

98. If the sales contract between a Chinese company and a Japanese B company stipulates that the arbitration shall be conducted in defendant’s country. Which place may carry on arbitration if the Japanese company is the complaint. __________

a. Beijing b. London c. Tokyo d. New York

99. An arbitration clause should specify the following points except for___________ a. an arbitration agency b. a location for arbitration a. the number of arbitrators d. an arbitral award

100. In international trade, the best method of settling disputes is __________ a. negotiation b. lawsuit c. arbitration d. litigation 101. If a B/L can be transferable, it must be a ___________

a. clean B/L b. transshipment B/L c. order B/L d. on board B/L

102. Based on whether the goods are loaded or not, the B/L can be classified into _____

a. clean B/L and unclean B/L b. direct B/L and transshipment B/L

c. straight B/L and order B/L d. on board B/L and received for shipment B/L 103. _____ is issued by the shipping company after the goods are actually shipped on board the designated vessel.

a. Shipped B/L b. Clean B/L c. Received for shipment B/L d. Liner B/L

104. _____ means that there is no definite consignee of the goods. a. Blank B/L b. Order B/L c. Straight B/L d. Direct B/L

105. Under_____, only the named consignee at the destination is entitled to take delivery of the cargo.

a. Blank B/L b. Order B/L c. Straight B/L d. Direct B/L

106. ______ merely confirms that the goods have been handed over to and are in custody of the shipowner.

a. Shipped B/L b. Clean B/L c. Received for shipment B/L d. Liner B/L

107. Combined transport B/L differs from Through B/L in that_______. a. only one carrier is involved in Through B/L

b. only one carrier is involved in Combined transport B/L c. combined transport B/L is always connected with sea d. through B/L is not connected with sea

108. Air waybill differs from B/L in that ____ a. air waybill is not a negotiable title to goods b. air waybill is a receipt of goods c. it is evidence of dispatch d. both a and b

109. Under CIF, freight on the B/L is marked as_______. a. Freight Prepaid b. Freight Collect c. Freight Pre-payable d. Freight Unpaid

110. Which one of the following bills of lading can be transferred only after endorsement? _______

a. Straight B/L b. Bearer B/L c. Order B/L d. Ocean B/L

111. The insurance policy or certificate will be issued by the insurance company after the insured pays___________.

a. freight b. premium c. cost d. expenses

112. According to the practice of the international insurance market , cargoes are generally insured for __________of CIF value a. 110% b. 120% c. 130% d. 140%

113. The insured amount for a CIF contract usually covers the following except for ___________,

a. freight b. insurance premium c. expected profits d. import duties 114. The insured amount will not be marked up in __________ a. insurance policy b. insurance certificate c. open policy d. combined certificate

115. It’s the same as the practice in international market that the period of the obligations of marine cargoes insurance in our country is from __________ a. door to door b. desk to desk c. warehouse to warehouse d. port to port

116. The goods was exported under CIF, the whole goods disappeared because of the accident, then the buyer___________

a. would not pay because of the goods not arriving at the destination b. should pay with all sets of shipping documents supplied c. may lodge a claim to the carrier d. may pay if the bank demanded he should

117. The followings are correct about the principles of insurance except for___________.

a. Any person who files a claim should have the insurable interest.

b. Loss of or damage to the insured goods shall be the direct result of the perils within the scope of the insurance cover

c. Details of the insured goods shall be provided on the principle of utmost good faith.

d. In case of any loss or damage, the consignee should lodge a claim against the insurer.

118. The transferring of marine cargoes insurance contract means ___________. a. the insured transfers his rights and obligations in the contract to another person

b. insurance contract is transferred as the ownership of the goods transferred c. insurable interests are transferred d. the articles insured are transferred

119. Buyer’s request for additional coverage can be accepted on condition that such extra premium is for ___________ account.

a. the seller’s b. the buyer’s c. the insurer’s d. the insured

120. As per our contract, insurance shall be ___________ by the seller. a. effected b. taken c. amended d. drawn

121. Which one of the followings transport documents is the title document of the goods in the foreign trade? __________

a. railway bill b. B/L c. consignment note d. packing list 122. If the expiry date of L/C is before Dec. 31st, and the latest shipment date is before Dec 10th, while the expiry date for presenting documents is within 15 days after the transport documents being signed and the date of shipment is Dec 10th, then the latest date of the documents being negotiated is before __________ a. Dec. 10th b. Dec. 25th c. Dec. 20th d. Dec. 31st

123. If there are more than two modifications in L/C amendment, beneficiary__________.

a. may accept all, or refuse all b. can accept partially and refuse partially c. must accept all d. can only accept partially

124. The addressee of commercial invoice generally is the __________. a. beneficiary b. applicant c. issuing bank d. seller 125. The description of goods on B/L __________. a. should be exactly the same as L/C b. have to use the full name of the goods

c. can be generally called as long as it does not conflict with L/C d. should be exactly the same as commercial invoice

126. As to the following documents, which of them can not be refused by the bank. __________

a. Document submitted later than expiry date for presentation of document

b. Document submitted 15 days later than the date of shipment, but less than 21 days

c. Document whose content is not in conformity with L/C d. There is discrepancy between the documents

127. The issuing date of B/L is July 15th, the expire date of L/C is August 15th and the period of time for presentation of documents is 15 days after the date of shipment. If Insurance Policy is required by L/C, then its issuing date could be__________.

a. 7.30 b. 7.15 c. 7.25 d. 7.10

128. Which is not correct about currency and the sum of money of L/C? __________

a. The capital and small letter of the sum of money on L/C must be unanimous (无异议的).

b. The currency of L/C and contract must be unanimous

45. 通常，信用证会详细列出受益人的名字、货物种类、数量、单价、总金额、装货港及目的港、贸易术语、

支付条款、装运单据、装运有效期及议付有效期等。 46. 费用大体上是按重量和目的地计算的。

47. 我们急需该批货物，务请已收到信用证，立即发货。

48. 在装运港船上交货下，订舱由买方安排，而不是由卖方安排。 49. 我们等候你们的装运指示。

50. 信用证有效期到8月31日截至。

51. 必须提供产地证，否则我们就得多付税了。. 52. 提单上应该注明“运费预付”字样。

53. 我们没有办法只有向你方提出质量低劣索赔。 54. 货物损坏肯定是在途中发生的。

55. 既然我们双方哪一方都不愿意让步，就提交仲裁吧。 56. 你方运来的货物数量与合同规定数量不符。 57. 我们要求你们赔偿我们遭受的损失。

58. 无论如何，我们要求你方采取措施以免类似事件再次发生。

VIII. Read the following passage and answer the questions followed.

The Globalization of Business

Globalization

For better or for worse, globalization has changed the way the world does business. The international Monetary Fund (IMF) defines globalization as the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology. The challenge that businesses and individuals face is to live with it, manage it, and take advantage of the benefits it offers. Technology rules

Technology is one reason for globalization. Computers which have eased telecommunication burdens are cheaper now than they have ever been and more powerful, too. New technology will lead to even further global business interaction, as the Internet becomes more accepted as a business medium worldwide.

Technology has helped small and medium-sized companies take advantages of the new markets that globalization presents. It is these companies, unencumbered by large head offices that can exploit global niche markets. Computers, faxes and E-mails have replaced large parts of the traditional office structures. Smaller companies can operate more efficiently on a much wider geographical basis with less overhead than ever before. Market opening

Those who argue that globalization is a good thing say that companies dealing on the world stage will eventually become much more efficient as they benefit from large economies of scale. Productivity will be boosted and living standards everywhere have the potential to rise as the world becomes richer and more prosperous because of globalization. There is ample evidence to support the benefits arguments. Global quality

Others take the opposite view, claiming that globalization has, in effect, triggered a “race to the bottom”. Countries with low wages are attracting jobs from higher wage-paying nations, thus dragging everyone down to their level. The alleged “exportation of jobs” has surfaced as an important political issue in most industrialized countries. For example, Nike has been raked over the coals for paying Vietnamese 84 cents an hour to make USD 100 sneakers. Globalization creates more jobs that it actually destroys, but they are in different sectors and in different geographic regions. It takes more skills, education and mobility to be employable. The jobs lost in Europe and North America over decades have generally been those requiring relatively uneducated workers. Indeed, wage differentials between the skilled and unskilled will likely increase. Both sides can point to ample examples to support their cases. But in the end, both are probably exaggerating to some extent. What is irrefutable is that the world economic pie is indeed bigger because of globalization and it is being sliced differently than before. Questions

1. What does globalization mean by IMF?

2. How does technology help push the globalization of business according to the passage? 3. What are the benefits of globalization according to the passage?

FOB and CIF under Incoterms 2000

FOB

FOB means that the seller fulfills his obligation to deliver when the goods have passed over the ship’s rail at the named port of shipment. This means that the buyer has to bear all costs and risks of loss or damage to the goods from that point. However, this term also requires the seller to “deliver the goods on board the vessel”. Clearly, it is hard to use ship’s rail as a point to divide responsibilities and costs because the loading of the goods is a continuous performance. As the stipulations in Incoterms are not imperative, the seller and the buyer can negotiate the division point of responsibilities and costs. There are several derived terms available to serve this purpose. *FOB Under Tackle

It means that the seller will deliver the goods beside the carrying vessel within the reach of the vessel’s tackle. The buyer shall bear the loading expense.*FOB Liner Terms The ship will be responsible for loading.

With these two terms, the buyer bears the loading cost since he is responsible for contracting and paying for carriage.

*FOB Stowed

The seller is responsible for loading the goods on board the vessel and packing the goods carefully and closely in the vessel’s hold. *FOB Trimmed

Besides loading the goods on board the vessel, the seller should also trim the goods to make the vessel evenly balance.

*FOB Free In

This is a combination of a sales term and a transport term. Free In means the carrying vessel is not responsible for loading the goods.

The seller pays the loading cost under the above three terms.

FOB term requires the seller to clear the goods for export. This term can only be used for sea or inland waterway transport. It is inappropriate when the seller is called upon to hand over the goods to a cargo terminal before the ship arrives, since he should then have to bear the risks and the costs before the goods have passed over the ship’s rail when he is no longer able to control the goods or to give instructions with respect to their custody. When the ship’s rail serves no practical purpose, such as in the case of roll-on/roll-off or container traffic, the FCA is more appropriate to use. CIF

CIF means that the seller must pay the costs and freight necessary to bring the goods to the named port of destination, and he has to procure marine insurance against the buyer’s risk of loss or damage to the goods during the carriage. The seller contracts for insurance and pays the insurance premium. But the seller should note that under the CIF term the seller is only required to obtain insurance on the minimum coverage. This term requires the seller to clear the goods for export.

CIF can only used for sea and inland waterway transport. When the ship’s rail serves no practical purposes such as in the case or roll-on/roll-off or container traffic, the CIP term is more appropriate to use. To stipulate clearly the responsibility and the cost of unloading, some derived terms can be used. * CIF Liner Terms

The ship is responsible for the unloading of goods. *CIF Landed

The goods must be unloaded onto the dock.

Under these two terms, the seller is responsible for unloading and pays the cost, including lighterage and wharfage charges, since he contracts for carriage. *CIF FO

FO means that the ship is not responsible for unloading the goods carried. *CIF Ex-ship’s hold

The seller fulfils his responsibilities when he has made the goods ready for unloading.

The buyer pays the unloading cost under the above two terms as the cost is not included in the freight paid by the seller.

However, CIF Free Out does not necessarily mean that the risk and cost for the discharging operations would fall upon the buyer under the contract of sale, since it might follow the stipulations of the sales contract or the customs

of the port that the contract or the customs of the port that the contract of the carriage procured by the seller should have included the discharging operation. Questions

1. What are the derived terms of FOB to help dividing the point of responsibilities and costs according to the

passage?

2. What are the responsibilities of the seller under FOB?

3. What are the derived terms of CIF to stipulate clearly the responsibility and the cost of unloading according to

the passage?

Packaging for Exporting

Packaging for exporting requires a different focus from packaging for domestic use. Often domestic packaging is primarily designed to display the product for sale, save weight, or advertise the shipper’s company. Export packaging is primarily designed to protect the product from hazards of international shipment and to comply with legal requirements.

What packaging is best for exported products depends on the nature and value of the goods, the type of transportation involved and the legal requirements. As we have already learned, different modes of transport present different dangers to the cargo. Delicate, high-value goods merit better protection than cheap bulk cargoes. Fresh fruits and vegetables present particularly difficult problems.

The first rule to be observed when packaging for export is to consider the entire journey, including the short hauls to and from the primary carriers. Pack the goods so that they will survive each leg of the trip intact. Special considerations must be taken when loading containers. Some types of cargoes do not mix with others. For example, drugs of a noxious chemical are clearly not compatible with food stuffs, and the two should not be stowed in the same container.

Many nations have requirements that imports be marked with the country of origin, that is, the country where the material was grown, manufactured, or produced. These requirements are often very specific. And entry will be refused if delayed, or extra charges will be levied on goods that do not conform to the requirements.

Some cargo requires special handling. A number of international markings are available to advise handlers that a certain crate must, for instance, be protected from heat or freezing or not handled with hooks. These markings should be made on the package indelibly because damage could be done if they are rubbed off. Stenciling with good ink is often preferred method. There are special requirements for dangerous goods such as explosive and radioactive materials. Compliance with all regulations in all countries of passage will minimize problems and delays with these types of cargoes.

Finally, it is a temptation to proudly advertise the contents of the container on the side and place one’s company logo prominently on the shipment. Often this practice is good advertising domestically, but internationally it only notifies pilferers what booty is to be had inside. Smart shippers use blind marks that usually consist of coded strings of letters and numbers to identify the shipment. Blind marks are meaningless to those who are not privy to the encryption method. Questions

1. What are the focus on domestic packaging and export packaging respectively? 2. What factors will influence the export packaging according to the passage?

3. What do blind marks mean according to the passage? And why are they used sometimes?

Modes of Transport

Transport is very important in foreign trade because goods sold by seller have to be delivered to the buyer abroad, and the delivery of goods is made possible by shipping services. The business of foreign trade shipping is complicated. Though most of the arrangements are often effected by shipping or forwarding agents, a foreign trade worker will find it useful to have a fairly good knowledge of the details regarding to the procedures of shipment, the shipping documents, etc. in order to fulfill an export transaction and effect shipment in a safe, speedy, accurate and economical way.

As, basically, most world trade is conveyed by sea transport, exporters and importers are more concerned with transport by sea than in other ways. Transport by sea is, however, increasing in scope and is best method for certain types of export and import and under emergency or urgent circumstances, though its limitations are obvious.

The new type of transport of goods by rail and then steamers has had the effect of greatly encouraging the use of the “container”. Railway containers of various types are available for shipment by steamer services too, and transport by containers is sometimes a “door-to-door” service.

Cargo transported by container ships is a modern way of transportation. Goods are packed into standard containers at the factory or the premises of the exporter and transported by rail or truck to the wharf on to the container ship which has been transported to destination.

According to ISO, there are several standard sizes of the containers, the most common are 8feetX8.5feetX40feet, or 8feetX8feetX40feet, or 8feetX8feetX20feet,

These containers, being of strong metal and of standard size, facilitate loading and unloading by machinery, expedite the shipping procedures, the time of shipment, reduce the loss of goods in transit, save packing material, and are with other facilities and benefits.

Cargo may be placed in special containers that can be transported by ship, train, truck, or a mixture of the three to complete a journey. It is important to select the right type of container for the protection of the specific cargo to be shipped, and there are many types to choose from. Almost all containers have a document holder on them so that documents can safely accompany the shipment. Aside from this, there is much similarity between types of containers. The basic design is an enclosed metal box with doors on the ends. This is called an end-loading, fully enclosed container. It is suitable for general cargo that is not particularly susceptible to damage from the outside environment. If the container is to be loaded while on a rail car, a side loading, fully enclosed container with doors on the sides is preferred so that access will not be blocked by the rail car in front or behind.

A fully endorsed container has an advantage in that it is often inspected by customs of the destination country at the factory or other place where it is loaded and then closed and a seal placed on the door. At the border such a container need not be reinspected, saving time and money. This operation is called a through shipment. Questions

1. What are the functions of containers according to the passage? 2. What is an end-loading, fully enclosed container? 3. What is called a through shipment?

Ocean Marine Insurance

Ocean Marine Insurance is the oldest form of insurance, probably dating to the Middle Ages. The organization of Marine Insurance took great steps forward with the formation and development of an insurance market on Lombard Street in London, English and subsequently---since 1769---Lloyds of London. Today Lloyds still plays a prominent role in Marine Insurance. The first American insurer was Insurance Company of North America, formed in 1794. CNA has operated continuously since that time, and remains an important market for marine as well as other forms of property and casualty insurance.

Because of its long tradition, marine policies tend to be the most traditionally worded policies in the insurance industry, and to have the longest tradition of case law legal decisions covering the various terms and clauses of the policies. While care should be taken with any insurance to clarify any definitions provided in the policies, this is especially true in marine coverage, where the defined terms may have long histories.

Ocean marine insurance is designed to cover various hazards related to the movement of goods. The first and obvious protection that can be provided is for the cargoes themselves. This protection can be provided to the seller or the buyer. Where ownership of and responsibility for the cargo are assumed crucial in determining what coverage is needed. This used to be a simpler exercise than at present---as a limited number of shipping terms existed, e.g., FOB, CIF, etc.

In 1990 the international shipping agency agreed on an expanded set of terms, which allow transfer of ownership and responsibility at various points along the transit route, including at customs borders. Various terms are set out in graphical format in Incoterms.

Risks are unavoidable in the shipment of goods. Goods are loaded and transshipped. Travel on the ocean provides its own set of perils. These risks require that the shipper take reasonable steps to ensure the safety of his goods while in transit, for instance, with proper packaging and/or containerizing, and shipping on a vessel appropriate for the goods in question.

Goods are generally handled many times during shipment, and marine insurance is designed to provide coverage throughout this process. They are first loaded at the origination point onto a land vehicle. They are held in a port prior to loading onto a ship. They may be unloaded at an intermediate port, and held for transshipment on a second vessel. Upon arrival in the destination country, they must be cleared through customs, then loaded onto land carriers for transfer to the buyer’s premises.(They may also be transferred between land transports on either the buyer’s or

seller’s end---during which time the goods are under the control of warehouse depot operators, and additional trucking or rail companies).

The marine policy may be scripted to meet a variety of situations and desired coverage. Generally, the policy covers perils of the sea, fire, jettison, explosion, defects in the ship that cause damage, and other perils.

Exclusions in the policy are important, and should be reviewed with a qualified risk manager, such as your insurance agent. These typically include damage due to dampness, breakage, delay or loss of market, acts of war, strikes, etc. Questions

1. Please give a brief discount of the historical evolution of insurance.

2. What are some of the hazards that a breakbulk shipment might be subject to during transit?

3. What considerations should be kept in mind by the exporter regarding cargo packing when the importer has not

specified packing requirements according to the passage?

Currency Choice in Invoicing

One of the most important elements in international commercial transaction is the currency used for invoicing. Choosing an invoicing currency involves comparing the amount of the invoice billed directly in domestic currency with the domestic currency equivalent of the amount of the invoice billed in foreign currency. Making the comparison is not a straightforward operation. Since payment will be made some time in the future, the spot rate cannot be used in making the comparison because the spot rate can, and probably will, change in the meantime. The forward rate is the obvious solution. In practice, however, the forward rate is not always directly applicable. Take the case where deliveries and invoices will occur several times over year. Applying the appropriate forward rate to each separate invoice implies a different price for each delivery. In this case, an average forward rate would probably be better.

The problem is the same for both the buyer and the seller. If the buyer agrees to be billed in foreign currency, the amount he owes will be exposed to foreign exchange risk. If the seller agrees to bill in foreign currency, the amount he receives will be exposed to foreign exchange risk. One or the other is going to have to cover his foreign exchange risk and they will both have recourse to the same financial intermediaries offering the same products. If markets were completely efficient, the choice of the invoicing currency would be completely neutral. In fact, it is not neutral at all. In the first place, not all companies have access to the same financial products at the same prices. Smaller companies are limited in the products they can use and often pay higher prices for the ones that are available to them. Furthermore, rules and regulations imposed by the monetary and tax authorities can create barriers and supplementary costs. Finally, all companies are not equally endowed with the knowledge and expertise to deal with problems associated with foreign exchange transactions. Thus, companies with the required know-how can offer the financial service of billing in their client’s domestic currency along with the merchandise they are selling and make a profit on both ends.

There can also be speculative element involved in pricing and billing in foreign currency. A professional that follows the foreign exchange market closely is going to form opinions on how different currencies will do. He may feel that some currencies are strong and are likely to appreciate. Others, he may feel, are weak and likely o depreciate. If he has any confidence in his opinions, he will try to take advantage of them by selling in strong currencies and purchasing in weak ones. A word of caution is in order. Most corporate treasures agree that multicurrency invoicing should exclude exotic currencies with narrow markets where financial services are costly or non-existent. Questions

1. Why is an average forward price better than spot rate and forward rate?

2. How do the seller and the buyer avoid to be exposed to foreign exchange risk?

Methods of Making Payments

For international payments, the traditional means of settling debts in a domestic economy such as cash, credit cards and traveler’s cheques, are only relevant for tourism. Bank transfers are probably the fastest and most efficient means of settling international debts. In a bank transfer, the importer instructs his bank to debit his account and credit the exporter’s account at the exporter’s bank. The transfer is made by telex, or SWIFT, which guarantees its speedy execution. The disadvantage of a bank transfer is that it is generated at the initiative of the importer and the exporter and has no guarantee in the cost of non-payment. Consequently, except for cash payments in advance, bank transfers are appropriate only for the most trustworthy relationships.

Checks are another instrument generated at the initiative of the importer. Unlike the bank transfer, however, they are not rapid. First of all, they have to be sent, which takes time, and could get lost in the mail. Furthermore, banks credit foreign cheques only after a long delay due to difficulties in processing and clearing them.

A promissory note is written promise by the importer to pay a given sum on a given date in the future. They play a small role in international trade but are often used as a support to financing operations as in bridge loans, for example.

A draft or bill of exchange is the most common means of payment in international trade. A draft is an unconditional order in writing issued by the exporter, ordering the importer to pay on demand or at a given future date a given sum of money. A draft is usually addressed to the importer or the importer’s agent. It can be payable to a particular beneficiary or to bearer. Bearer drafts are negotiable. When it is paid on demand it is called a sight draft. When it is payable at a future date it is called a time draft.

In most cases three parties involved in the draft. The drawer is the party that draws up the draft, sighs it and sends it to the second party called drawee. The drawer is usually the exporter and the drawee is usually the importer or importer’s agent, or a bank under L/C. The beneficiary of the draft is called the payee. Normally the drawer and the payee are the same.

When the drawee receives the draft, he writes “accepted” on its face, followed by the date and his signature. When this has been done, the draft becomes an acceptance and the party that does the accepting has the obligation to pay at maturity. If the accepting party is a commercial enterprise, it is known as a trade acceptance. If a bank accepts the draft, it is known as a banker’s acceptance. Questions

1. What are the commonly used means of settling debts in international payments according to the passage? 2. What are trade acceptance and banker’s acceptance?

Arbitration

Among the available dispute resolution alternatives, arbitration is by far the most commonly used internationally. Arbitral award is considered final and binding. While several mechanisms can help parties reach an amicable settlement---for example through conciliation under the ICC Rules of Conciliation---all of then depend, ultimately, on the goodwill and cooperation of the parties. A final and enforceable decision can generally be obtained only by recourse to the courts or by arbitration. As arbitral awards are not subject to appeal, they are much more likely to be final than the judgments of courts of first instance. Although arbitral awards may be subject to challenges, the grounds of challenge available against arbitral awards are limited.

Arbitral award enjoy much greater international recognition than judgments of national courts. About 120 countries have signed The 1958 United National Convention on the Recognition and Enforcement of Foreign Arbitral Awards, known as The New York Convention. The Convention facilitates enforcement of awards in all contracting states. There are several other multilateral and bilateral arbitration conventions that may also help enforcement.

Arbitration is also noted for its neutrality. In arbitral proceedings, parties can place themselves on an equal footing in five key respects: (1) place of arbitration; (2) language used; (3) procedures or rules of law applied; (4) nationality; (5) legal representation.

Arbitration may take place in any country, in any language and with arbitrators of any nationality. With this flexibility, it is generally possible to structure a neutral procedure offering no undue advantage to any party.

Judicial systems do not allow the parties to a dispute to choose their own judges. In contract, arbitration offers the parties the unique opportunity to designate persons of their choice as arbitrators, providing they are independent. This enables the parties to have their disputes resolved by people who have specialized competence in the relevant field.

Arbitration is faster and less expensive than litigation in the courts. Although a complex international dispute may sometimes take a great deal of time and money to resolve, even by arbitration, the limited scope for challenge against arbitral awards, as compared with court judgments, offers a clear advantage. Above all, it helps to ensure that the parties will not subsequently be entangled in a prolonged and costly series of appeals. Furthermore, arbitration offers the parties the flexibility to set up proceedings that can be conducted as quickly and economically as the circumstances allow. Questions

1. What advantages does arbitration enjoy as a means of settling disputes according to the passage? 2. What is The New York Convention, what role does it play in the development of arbitration? 3. According to the article, what factors have helped ensure the impartiality of arbitration?

Letter of Credit Transaction

There may be some uncertainty under L/C payment. Exporters can never totally control the payment process. Documents which are required to be presented under an L/C are frequently prepared by other people, and may not

meet the strict compliance standards required by the banking community for payment. Sometimes banks which have not properly ensured they will be adequately reimbursed by their customer, have very narrowly applied L/C principles to deny payment. They have been regularly upheld by courts on grounds that the seller has not strictly complied with the terms of the L/C.

To maximize the chance for payment under an L/C, a seller/beneficiary must know the rules of the game. The rules are codified in a publication sponsored by the International Chamber of Commerce (ICC), known as the Uniform Customs and Practice for Documentary Credits. The latest version of the rules is ICC Publication No. 600, 2006 Revision (the UCP 600).

The rules in the UCP 600 are drafted by and for the banking community. One of the major purposes is to protect the banks from liability in L/C transactions. The banks are providing a service---the financing of the transaction---and they expect to be protected from getting involved in disputes between the parties as to the terms of the sales contract. For this reason, “the independence principle” is a very important concept in L/C transactions. This means that the L/C, and the documents required under the L/C for payment, is completely independent from the underlying transaction between the buyer and the seller.

The bank is not concerned with whether the contract between the buyer and the seller is being performed according to its terms. The bank’s only concern is whether the documents presented by the seller conform to the documents required under the L/C, and whether the documents are presented within the required time periods. The bank employees who examine documents presented under the L/C are essentially clerks. Their job is not to make judgment calls, but simply to see if the documents presented by the seller/beneficiary comply strictly with the documents required by the L/C. It is therefore very important to assist clients in understanding the rules, because a lack of knowledge will only work to their detriment. Questions

1. Why is it difficult for the seller to have total control on L/C?

2. What institution sets the rules governing letter of credit and what is the name of the rules? 3. What is the bank concerned with in letter of credit transactions?

Ocean Bill of Lading

Ocean freight is the most widely used form of transportation in international trade. It still has the attraction of being a cheap mode of transport for delivering large quantities of goods over long distances.

The ocean bill of lading is an extremely important document that serves three purposes. It is a cargo receipt issued by the shipping company to the shipper; it is also a document of title of the goods; finally, it forms the evidence of a contract by the shipping company to carry the goods from the port of shipment to the port of destination.

The exporter obtains the bill of lading from the shipping company and completes it himself or gets his freight forwarder to do it. It is then returned to the shipping company. Bills of lading are usually made out in sets, which consist a number of originals (usually three) and a number of copies.

The originals are signed by the shipping company and therefore become the negotiable title to the goods that the bill of lading covers. Each original is negotiable, but once one has been negotiated the others are void.

When the goods are loading on board the vessel, the shipping company checks the details on the bill and hands it to the exporter. As soon as the bill of lading is received by an exporter, he must arrange it to be sent to his customer. The exporter can mail the bill to the customer---either direct or through a bank, depending on the method of payment.

If the handling over of the bill of lading is linked with a term of payment, it is important that all originals are kept together. When payment is arranged under a documentary credit, the terms of credit usually state that the bill of lading must be clean, shipped, in order and blank endorsed. This means that the goods must be in apparent good order, be loaded on board the stated vessel and that the bill gives title to any bearer. Great care must be taken to see that this legal document is made out in the proper way. Questions

1. What are the three purposes that an ocean bill of lading serves?

2. Once an original copy of bill of lading has been negotiated, what will happen to other originals? 3. Please briefly describe the process of using the bill of lading.

4. What kind of bill of lading is generally required by the bank for negotiation?

Principles of Insurance

It is important that insured should have a basic understanding of some of the underpinning principles of insurance generally, and particularly their implications to cargo insurance.

Insurable interests

The principle of insurable interest is a vital one to all forms of insurance. In order to take out a policy the policy holder must have an insurable interest in the insured matter. In the case of cargo insurance this means that they must benefit from the safe arrival of the goods or be prejudiced by their loss. Without such a principle it would be possible for any individual to take out an insurance policy on any eventuality they could think of. It is also necessary to prove insurable interest in order to make a claim against a policy and this can pose a problem if the claim is actually made by a non-policy holder. Indemnity

Most insurance is based on the fact that the insurers promise to indemnity the insured. That is, they promise to put them back into the situation they were in before the loss. It is obviously not a principle of life insurance. In practice the indemnity on cargo insurance policies is expressed as an amount of money, the insured value of the goods. Utmost good faith

Once again this is a principle which applies to all forms of insurance. The insurers are almost totally dependent on the insured to disclose any relevant information regarding the insured risks. Subrogation

In the event that loss or damage occurs due to an insured risk then a claim will be made on the insurance company. If we assume that the claim is successful then the insured will regard the matter as closed. However, if nothing else happens but we have a carrier, who may well be liable for the loss or damage, who has apparently avoided any liability. It is the principle of subrogation which avoids this, in that it allows the insurance company to take action against liable carriers in the name of the insured. The exporter, or the importer, must maintain any rights of action against carriers, by avoiding giving clean receipts and advising loss or damages as soon as possible, but these rights are subrogated to the insurance company once the claim has been paid. It is very fair to the insured in that the claim must be paid first. The insurance company cannot make a claim on the carrier and only pay the insured if the action against the carrier is successful. The insured will have a valid claim irrespective of the carrier’s liability. Also, in the unlikely event that the insurers actually receive more in their claim on the carrier than they have paid to the insured, then the insured receives the difference. Proximate cause

It is perfectly reasonable for insurance companies to prefer that claims are made for loss or damage due to risks which are actually covered by the policy. In fact many claims fail simply because the cause of the loss is not an insured risk. When a loss occurs it is often the result of not one clear event but of a series of events which, cumulatively, lead to a loss. What the insurers must do is to establish the actual cause of the loss, what they describe as the “active, efficient cause”, that is the proximate cause. Questions

1. What is meant by “insurable interest” in the case of cargo insurance? 2. How is the amount of indemnity calculated on cargo insurance policies? 3. Why is it important to establish the proximate clause?

Bonded Warehouses

It is clear that a scheme of non-levy of duties and taxes is more attractive to an exporter than a scheme of initial levy and subsequent refund, as the first type of arrangement reduces his financing costs. However, schemes of non-levy of duties and taxes have their limitations, and for a large number of manufactured products the scheme of duty drawback is likely to be more appropriate.

Bonded warehouses are not a new phenomenon. They have existed for over a century as part of the national customs arrangements of many countries. Their advantage is mainly that they make it possible for an importer to postpone paying customs duties. An importer receiving a consignment of merchandise by sea or air may either clear the goods for home consumption by carrying out the necessary import formalities and paying the duty chargeable, or have the goods delivered to a bonded warehouse officially recognized by the customs. After the goods are warehoused, they may either be reexported from the country within a prescribed period of time or cleared for home consumption, in one or more lots, after the appropriate import duty has been paid. This arrangement enables an importer to order his goods in economic quantities but at the same time pay the import duty, which forms part of his material cost, only when he needs the goods for sale or for use in his factory, and only on the quantities he needs at a particular time. The boned warehousing arrangement is particularly useful for materials that are charged at a high level of import duty, such as tobacco for the manufacture of cigarettes, where the duty may exceed the value of the material.

If a company is planning to install a new plant, it can avoid paying import duty on each of the separate shipment of

machinery and components for the plant by placing the individual deliveries in a bonded warehouse. The various lots may be cleared from the boned warehouse when the company is in a position to begin erecting the entire plant. The bonded warehousing scheme may also be useful for a manufacturer who needs to make quick delivery to a number of markets in an area. For example, if special types of ball bearings manufactured by a Scandinavian producer are stocked in a boned warehouse in Colombo, they can be stipulated at short notice to buyers in Srilanka as well as to importers in neighboring countries, since time for the long transport journey from Scandinavia is save. Bonded warehouses may be set up by official agencies such as the port authorities or even by private companies. In either case, the customs authorities of the country have to officially recognize them as authorized bonded warehouses for storing non-duty-paid goods. Before granting such authorization, the customs authorities assure that the premises are suitable and secure for the purpose, and that procedures for entering material (on which duty had not been paid) into the warehouse, storing them and removing them from the warehouse are satisfactory.

Bonded warehouses are generally established at port towns, but inland bonded warehouses far from the ports are also sometimes set up. Bonded warehouses may be established wherever there is a demand for bonded storage of imported materials. When bonded warehouses are away from the customs ports, it is necessary to institute suitable customs supervision over the transport of the imported materials on which duty has not been paid from the place of import to the inland warehouse. Questions

1. State the benefit the bonded warehouse brings about to an importer or an exporter. 2. How does the customs supervise and control the bonded warehouse?

Documentary Collection

The simplest method of documentary payment is a draft accompanied by certain documents, called a documentary collection. In this case, the exporter, after having shipped the merchandise, forwards the draft along with the required documents to his bank. The required documents include a commercial invoice and sometimes a consular invoice as well, an insurance certificate, a certificate of origin, and a bill of lading in negotiable form. The bill of lading is a contract between the shipper and a transportation company in which the latter agrees to transport the goods under specified conditions which limit its liability. It is the shipper’s receipt for the goods as well as proof that the goods have been or will be shipped. An order bill of lading consigns the goods to the order of a named party (usually the exporter) and is negotiable. Ownership can be transferred by endorsing the bill on the reverse side. Therefore, it can serve as collateral for loans.

The negotiable bill of lading is the most important document for documentary collection because it gives its holder title to the merchandise in question. Having received the required documents, the bank notifies the importer who then accepts the draft and receives the bill of lading in return. In this way, the exporter is sure that the importer will not get title to the goods until he has accepted the draft.

Documentary collection is not foolproof because drafts are not always accepted and paid. If the draft is refused by the importer, the exporter still has the problem of either repatriating the goods or selling them somewhere else, probably at a loss. If the draft is not paid, the exporter is left with a bad debt. Questions

1. What are the required documents for documentary collection according to the passage? 2. Why is B/L important for documentary collection according to this passage? 3. Why is documentary collection not always foolproof?

Complains and Claims

On execution of a sales contract, both parties to the contract must strictly perform their respective obligations. If one of the parties breaches the contract, the other may run into trouble, or suffer great losses. In this case, the affected party is entitled to request the defaulter to make up his losses according to the relevant provisions under the contract. Such request the affected party makes for compensation is called “claim”, and that the party responsible for the losses or damage takes measures to deal with the claim one way or another is called “settlement of claim”.

Claim is a common occurrence in foreign trade practice, but it does not mean that it will happen in every transaction. However, the affected party, in consideration of the good relation with the other party, or the loss incurred being minor one, sometimes does not lodge a claim against the suppliers, but rather requests him to make sure that such things will not happen again. This is known as “complaint” rather than a claim.

In international sales transaction, most claims are filed by the buyer against the seller such as the seller’s failure to deliver the goods, late delivery or shipment of the goods, short weight, the goods’ inconformity with the contract stipulation (including “shipping the inferior for the contracted quality goods”), incomplete documentation and

damages caused by improper packing, etc. However, there are times when the seller files claims against the buyer. This may occur when the buyer refuses or delays opening an L/C, delays sending a vessel to carry the goods under FOB terms or refuses to take delivery of the goods, and so on.

Generally speaking, the parties involved in a claim will first try to settle a claim through friendly negotiation, and avoid arbitration or litigation. The following points must be kept in mind when filing a claim.

First, generally all sales contracts stipulate a period for either party to file a claim, then that party must do it within the time limit. The party responsible for the claim should take immediate action to make investigations, send prompt reply to the affected party and solve the problem in accordance with the international trade usages or conventions. Second, the affected should give a clear description of the loss or damage he has incurred, and also tells the reason why the other party should be responsible for the loss or damage. It is more convincing if the affected party can provide the relevant evidences, a certificate of inspection, for example, to support his claim or request.

Third, despite that dealing with a claim is no pleasant matter, we should be calm and reasonable in an attitude when negotiating for a settlement. Being rude and emotional does not help to resolve a dispute. Questions

1. What are the differences between the claims and complaints? 2. What should be noted when filing a claim?

IX. Practice in the given situation.

The exercises in this part of the whole sixteen chapters form an international trade process involving a series of consistent and coherent activities from setting a company to settling disputes. For each chapter, you and your partner(s) are to work together to accomplish a task relating to international trade activities. After finishing all the exercises, you will experience processes from the preparation for pushing sales, the negotiation of a contract to the implementation of the contract, and thus get a general view of the import and export operating procedures in the real business world.

Task One: set up your own exporting/importing company

A sets up an exporting company in China, providing the basic information about the company including scale of operation and line of businesses, preparing samples and materials such as brochures, catalogues and price list. He can also design a company webpage to help introduce his company. B establishes his company in a foreign country or identifies his corresponding line of business. Task Two: talk about trade forms

A is selling the products on behalf of the exporting company in China. B, on behalf of the foreign company, learns about the products of A’s company through Internet, and finds a wide market of a product in his country. Therefore, he has come to discuss the possibility of signing a sole agency agreement with A on this product for a period of three years. He says that his company is experienced in the business of this kind and enjoys good relationship with many wholesalers and retailers in this line. He wants to expand this business in the years to come. A thinks that the annual turnover of the foreign company is not large enough, and since there are also other clients who are importing the products in large quantities, there is no need to entrust a sole agent in that country at present. At last, both A and B agree to do business in direct trade form of importation and exportation. Task Three: establish business relationship

Both A and B express the willingness of establishing business relationship with each other. They get to know the business regulations of the two countries and the common practices of the other company. B obtains materials like brochures, catalogues and price list from A, and visits the plants, or/and showrooms, or/and sample rooms if necessary. Considering the application of trade terms and the responsibilities each party wants to bear, they decide to adopt the CIF/CIP term.

Task Four: negotiate description of commodities

A and B make clear about the commodities they want to import/export and discuss about the quality of the commodities, the quantity they want to deal, and the packing needed. They reach an agreement of the way of showing quality, ways and systems of measurement, and types of packing. In order to avoid disputes, a more or less clause and a quality tolerance clause are also be negotiated. Task Five: discuss transport and shipment clause

A and B are discussing the best mode of transport for the consignment. According to the actual situation, they decide to adopt sea transport. B requests that the goods arrive at the port of destination before XXX so that they can sell/use

the goods in time. Because there is no direct liner available, and the quantity is relatively large, at last, they agree to allow partial shipment and transshipment through Hong Kong. The time of shipment is fixed by creating a link between the time of shipment and the deadline by which the relevant L/C must reach the seller. Details about shipping advice and partial shipment such as terms of shipments, lots and quantity or weight are also discussed. Task Six: choose insurance coverage

Both A and B agree that the insurance be effected by the seller, but they have different opinions about the insurance coverage and insured amount. Group A proposes to cover WPA for 110% of the invoice value, while Group B thinks that War Risk shall also be covered and the insured amount should be 130% of the in voice value. They all express their own reasons. At last, the two parties reach the agreement of covering WPA and War Risk for 110% of the in voice value, and the additional premium for the extraneous coverage is for the B’s account. Task Seven: fix the price

A and B are discussing the price terms. A quotes a CIF price to the port of destination, but B thinks that the price is on the high side and ask for a sweeping reduction. A sticks to his price but agrees to allow a quantity discount. At last, the two groups reach an agreement of a commission and discount-included unit price. Task Eight: decide the term of payment

A and B come to the discussion of terms of payment. A wants payment to be made by confirmed and irrevocable letter of credit, payable against shipping documents, while Group B prefers D/A or D/P. Both parties have reasonable explanations about their choice. B reasons that D/A or D/P is usual international practice. A explains to him why he insists on L/C payment and finally succeed in proceeding him to accept it. At last, they decide the payment to be made by confirmed and irrevocable letter of credit, 60 days after sight. Task Nine: discuss inspection, claim, force majeure and arbitration clause.

A and B agree to inspect the goods in the exporting country and reinspect the goods in importing country. They specify the scope of force majeure events, consequences, time limit of notice to the other party, certificates and the agencies who issue them in the force majeure clause, and the arbitration agency, location for arbitration, number of arbitrators and their selections, cost of the arbitration and the scope of arbitration in the arbitration clause. A claim clause and penalty clause are also discussed. Then they go over the other terms and conditions of the contract to see if they agree on all the terms and decide to sign the contract. Task Ten: check and amend L/C

The L/C reaches A’s company in time. A knows that it is necessary to check up the L/C with the contract carefully. When he checks the L/C, he finds that all the clauses are all right except the shipment date. So A advises B to make amendment accordingly. B asks C, a clerk of the opening bank, to make amendment notification. About a week later, A receives the amendment notification from the advising bank. A then presents the amendment notification to the advising bank for confirming. Then everything is right. Make a dialogue about the above-mentioned process.

Task Eleven: make the goods inspected

Before delivery, A applies for the inspection of quality, quantity and packing to C in order to obtain relevant certificates. C goes through the procedures for inspection and issue relevant certificates without delaying the prescribed time for shipment. After arrival, B registers import commodities with C located at the port of discharge, completes application forms, submit relevant documents, and applies to the same authorities for a further inspection. Task Twelve: discuss advancing shipment.

The sales contract stipulated that shipment is to be effected 40 days after the seller receives the L/C”. And the selling season for the goods is before the Christmas. But the L/C reached the seller on Nov.1st. Now B is requiring A to advance shipment and make shipment from stock so that they can catch the selling season. A checks with C, the production manager, and C tells him that the products are to be made to A’s specifications, so it’s impossible to supply from stock. But they can make the goods ready before Nov. 12th. At last, A agrees to try his best to effect the shipment before Nov. 15.

Task Thirteen: take out insurance

E, a manager of PICC is explaining to A the coverage of insurance, including the practice and exceptions. At last, A decides to take out insurance with PICC. The following expressions may be of help. the insurance with the PICC against WPA and War Risk

insured amount is …% of the invoice value extra premium….for the buyer’s account

the coverage is limited to 60 days upon discharge of the goods from the vessel.

lodge a claim with PICC’s agent within 60 days after the arrival of the goods the claim is supported by survey report

Task Fourteen: get to know customs entries and tariff

G is asking A something about customs entries and tariff, including when to submit the papers to the customs, whether he can submit the papers in advance, documents needed, bonded goods, drawback system and so on. A explains them one by one.

Task Fifteen: prepare and discuss documents for negotiation

A and F, a green hand in international business, are preparing documents for negotiation under L/C. A explains the types of documents required, and the role, limitation and likely problems of each document. At last, all documents are made out according to the L/C. The next thing to do is to send the documents to the negotiating bank tomorrow for negotiation.

Task Sixteen: settle the dispute

After arrival of the goods, B finds that some of the goods are broken, and he thinks that the loss is due to improper packaging. B lodges a claim with A for the damage of the goods and proposes to be compensated by 3% of the total value plus inspection fee. A also has shipping documents to prove that the goods were received by the carrier in perfect condition. He has inspection certificate of packaging, too. But because the loss incurred being minor one, and in order to maintain good relationship, A agrees to compensate 1,000 US dollars to cover the inspection fee.

《外贸实务英语》测试题A

I. Translate the Following English Words into Chinese. (20’)

1 bill of exchange 2 sight draft 3 irrevocable L/C 4 penalty 5 money of payment 6 negotiating bank 7usance L/C 8 award 9 commercial invoice 10 packing list

II. Translate the Following Chinese Words into English. (15’)

1佣金 2单价 3承兑 4贴现 5受益人 6检验 7独立代理 8支票 9进口许可证 10保险单 11背书 12补偿贸易 13汇付 14索赔 15贸易术语

III. Write down the Full Name of the Following Abbreviations and the Translation.（10’） 1 D/P 2 M/T 3 D/D 4 CIF 5 B/L

IV. Decide whether the following statements are true or false by writing “T” for true and “F” for false in the bracket besides each statement. (10’)

1. Should cargo be damaged or lost during transit, the carrier bears no responsibility whether or not the damage or loss is due to

the carrier’s negligence.

2. When negotiating a sales contract, the exporter should choose the currency that is likely to become weaker.

3. The exporter should make sure that the shipping or air freight space is available before he agrees to a certain delivery date. 4. Arbitration can be used to settle criminal cased as well as civil cases.

5. Precise and fully descriptions of the quality and quantity of goods help to avoid misunderstanding or dispute. 6. For the trade form of distribution, the principal set the retail price, retain title and controls the goods. 7. In bidding, the price of goods or service is quoted by the seller.

8. Countertrade includes all of the different forms of the exchange of goods for goods.

9. In a draft, the drawer and payer is usually the seller and the drawee and payee is usually the buyer.

10. A transferable credit can be transferred by the original (first) beneficiary to several other (second) beneficiaries for more than

once.

V. Fill the blanks with the proper words or phrases learned. (20’)

1. H________________ is the currency that is reliable and stable and stable and more in demand.

2. C________ sales are between an exporter and an importer whereby the importer does not become outright owner of the goods. 3. B_________ evidences that the goods have been received on board the carrier and that the shipper is under the contract to carry

out the transportation agreement.

4. C_________ bank (frequently, the advising bank) is requested to add its own commitment to he letter of credit.

5. A d___________ is an unconditional written order addressed by one person to another and signed by the person giving it,

requiring the person to whom it is addressed to pay at sigh or at a fixed or determinable future time the sum of money clearly specified to, or to the order of, a specified person, or to bearer.

6. C____________ draft is the one to which no other documents are attached.

7. I __________ means the act of the drawer in filling up the draft with particular including the name of drawee (or payer), the

amount payable, the date and place of payment and the name of the payee, etc.

8. A _________is required for a usance draft. It means if a usance draft is presented, the drawee takes up his responsibility by

accepting the draft for payment at a fixed future date through putting the word “accepted”, his signature and the date of acceptance on the face of the draft.

9. If the holder of a usance draft wants to get money before payment, the draft can be d__________ through a discounting bank at

the prevailing discount rate.

10. C__________ is a special type of draft, it is a sight draft and the payer is a bank. That is an unconditional order addressed by the

drawer, requiring the bank to pay the sum of money to the payee.

11. M_________ refers to the transfer made between banks by mail, with the advantage of low charges and disadvantage of

slowness.

12. O_________ bank is the bank located in the importer’s country that opens the letter of credit on behalf of the importer. 13. An advising bank is requested to add its own commitment to the letter of credit. In this case, it is called c____________ bank 14. An u____________ L/C means that the L/C doesn’t have any payment guarantee by a bank in the exporter’s country. 15. D________________ is a certain percent of price reduction, a special favor given by the exporter to the importer.

16. The s____________ L/C means payment is immediately make to the beneficiary on presentation of the stipulated documents

and on condition that all terms of the credit have been complied with.

17. D__________ means documents can only be handed over the buyer when he has paid the amount on the draft.

18. A b_________ is the party in whose favor the letter of credit is issued, and who is entitled to receive the payment, that is, the

exporter.

19. Documentary c___________ is a method by which the exporter authorizes the bank to collect money from the importer. 20. P__________ means the holder of the draft presents the draft to the drawee (or payer) asking the latter either to pay or to accept

the bill.

VI. Fill in each of the following blanks with an appropriate word. (15’)

devalued stable valuable rise interest suffer traded performed standard decline

Money is a medium of exchange and is being _1______ for countless commodities. It is highly desirable that the value of money should remain____2____ over the years; otherwise its functions cannot be ___3____ properly. This is particularly true of its use as a __4_____ for deferred payments. For example, if money falls in value over the years, a person borrowing money is made better off because the money with which the debits repaid later is less___5____ than the money borrowed. The person from whom the money

was borrowed receives back the ___6____ currency and has therefore lost on the transaction. To overcome this __7_____ in the value of money, interest rates ___8___ in such times, so that those who lend money receive in _9____ some of the capital losses they are inevitably going to ___10_____ when repayment time comes. VII. Answer the Following Questions. (10’)

1. What are the differences between agent and distribution?

2. What is the main advantage of a letter of credit for the seller and the buyer?

《外贸实务英语》测试题B

I. Translate the Following English Words into Chinese. (20’)

1 time draft 2 confirmed L/C 3 tariff 4 money of account 5 promissory note 6 commercial draft 7 advising bank 8 Force Majeure 9 certificate of origin 10 combined transport document II. Translate the Following Chinese Words into English. (15’)

1折扣 2背书 3跟单托收 4汇付 5经销 6单价 7索赔 8商业发票 9保险凭证 10汇率 11检验证书 12贴现 13承兑 14装箱单 15不可撤销信用证

III. Write down the Full Name of the Following Abbreviations and the Translation. (10’） 1 D/A T/T 3D/D 4 FOB 5 L/C

IV. Decide whether the following statements are true or false by writing “T” for true and “F” for false in the bracket besides each statement. (10’)

1. According to the standard international practice, if an L/C does not indicate whether it is revocable or irrevocable, it should be

deemed to be revocable.

2. When an L/C expressly indicates that it is a transferable one, it means that such an L/C must be transferred.

3. In international trade, the party that has failed to implement the contract may choose not to carry out his contract obligations if

he has paid the required penalty.

4. When the departure term (EXW) is used, the commodity is generally inspected at the factory or warehouse where the delivery is

made.

5. When negotiating a sales contract, the exporter should choose the currency that is likely to become weaker.

6. It is the importer’s responsibility to arrange shipment under FOB terms.

7. The exporter should make sure that the shipping or air freight space is available before he agrees to a certain delivery date. 8. For the trade form of agent, the principal set the retail price, retain title and controls the goods.

9. The essence of consignment trading is that goods exported on the consignment remain the title to the exporter.

10. Generally speaking, under FOB in Incoterms 2000, it is the seller’s responsibility to apply for the export license and pay the

export duty.

V. Fill the blanks with the proper words or phrases learned. (20’)

1. C________________ refers to the money received by an agent for his intermediary service.

2. S________________ is the currency that is not readily convertible to gold, or into other currencies which are more in demand,

and that is unstable in value.

3. B_________ is the party in whose favor the letter of credit is issued, and who is entitled to receive the payment, that is, the

exporter.

4. An a_________ is the party who applies for the opening of a letter of credit, that is, the importer. 5. A c_________ is the person or company to whom merchandise is to be delivered.

6. Under separate cover, we are airmailing you a copy of our catalogue with detailed s________.

7. Draft is a negotiable money instrument. If the draft is transferred for value rather than as a gift negotiation takes effect only

when the e___________ is made.

8. D ____________ draft is the one that can be honored only when certain other documents have been attached to

9. P__________ means the holder of the draft presents the draft to the drawee (or payer) asking the latter either to pay or to accept

the bill.

10. An effective e_____________ must be on the back of the draft itself and consists of a signature, or plus the name of the

endorsee and related comments by the owner of the draft

11. When a draft is duly presented for acceptance or payment but the acceptance or payment is refused, the draft is said to be

d_____________.

12. T_________ means the transfer made by telecommunication system such as telex or telegraph. It is faster than M/T, but more

expensive.

13. A _________ bank is the bank located in the exporter’s country who informs the exporter that a letter of credit has been opened

in his favor and transfers the L/C to the exporter. It is usually the correspondent of the issuing banking.

14. An i____________ L/C is the one that cannot be modified or rescinded by the opening bank without express permission of all

parties, including the exporter, importer, and intermediary banks.

15. The T (U) ____________ L/C implies that the seller is paid in a specified number of days after the presentation of the stipulated

documents.

16. The buyer will purchase regularly from a foreign supplier. Then the r_________ L/C may be used.

17. Documentary c___________ is a method by which the exporter authorizes the bank to collect money from the importer. 18. D____________ means that the title documents will be handed over to the buyer once the buyer has accepted the usance draft

drawn by the seller.

19. C________ sales are between an exporter and an importer whereby the importer does not become outright owner of the goods. 20. B_________ evidences that the goods have been received on board the carrier and that the shipper is under the contract to carry

out the transportation agreement.

VI. Fill in each of the following blanks with an appropriate word. (15’)

purchase inspected so to otherwise negotiating upon rule under out

Since there is, as a __1_____, an inspection clause in a business contract, the exporter is ___2___ obligation to observe the contract stipulation and carry ___3_____ inspection of the export goods as required; _____4______ he cannot get payment form the negotiation bank.

Careful and proper inspection is indispensable__5______ ensure the quality of the goods that the buyer wants to ____6____ both at home and especially form a foreign supplier. It is the accepted practice of the exporter to have the goods __7______before shipment, ___8____ that the seller can obtain the certificate of quality, quantity or weight and, thereby, _____9___ with the bank for payment __10______ presentation of the shipping documents, of which such certificates are the component part. VII. Answer the Following Questions. (10’)

1. What are the same points and differences between CFR and CIF?

2. Why is documentary L/C commonly used as a term of payment in international trade?

Since there is, as a __1_____, an inspection clause in a business contract, the exporter is ___2___ obligation to observe the contract stipulation and carry ___3_____ inspection of the export goods as required; _____4______ he cannot get payment form the negotiation bank.

Careful and proper inspection is indispensable__5______ ensure the quality of the goods that the buyer wants to ____6____ both at home and especially form a foreign supplier. It is the accepted practice of the exporter to have the goods __7______before shipment, ___8____ that the seller can obtain the certificate of quality, quantity or weight and, thereby, _____9___ with the bank for payment __10______ presentation of the shipping documents, of which such certificates are the component part. VII. Answer the Following Questions. (10’)

1. What are the same points and differences between CFR and CIF?

2. Why is documentary L/C commonly used as a term of payment in international trade?

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