国际实务习题

Trade Terms

I. True or False

1. A unit price clause in a contract consists of four parts: currency unit, unit price figure, measuring unit and price terms. ( )

2. The fluctuations of exchange rates may influence the interests of both exporter and importer. ( )

3. Commission refers to service fees, while discount is a certain percent of price reduction. ( )

4. Under CIF, cargo insurance is to be effected by the buyer. ( )

5. According to whether the price includes commission or not, the price can be divided into net price and commission-included price. ( )

6. “USD200 per M/T CIFC2 London” means that the Seller will receive 200 US dollars for mer metric ton. ( )

7. All international business transactions are done under Incoterms 2010. ( )

8. Trade terms can be called price terms because they stand for the price component. ( )

9. EXW in Incoterms 2010 is the trade term under which the risks of the seller are in minimum. ( )

10. CFR is the term when the consignment is delivered with all the charges up to arrival at the port of destination paid by the Seller. ( )

11. CPT is the most appropriate term when the seller must pay the cost and freight necessary to bring the goods to the named port of destination by a roll-on/roll-off vessel. ( )

12. When the seller pays for the goods to be placed alongside the vessel on the quay or in lighters at the named port of shipment, the term is FOB. ( )

13. If the seller agrees to deliver the goods to a ship, but not to pay for loading them, then the term is FOB. ( )

14. Generally speaking, under FOB in Incoterms 2010, it is the seller?s responsibility to apply for the export license and pay the export duty. ( )

15. Under FOB San Francisco, San Francisco is the port of destination. ( )

16. The buyer has more responsibilities, costs and risks when using FOB than using CIF. ( )

17. Under FCA term, the seller has no obligation to contract the carriage. ( )

18. Under EXW, the export bears the least risks involved in the shipment of cargoes exported. ( )

19. Under CFR, the seller must pay the usual freight rate and any additional costs that arise enroute. ( )

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

21. Under the terms FOB, CIF and CFR, the risks of loss of or damages to the goods, as well as any additional costs due to events occurring after the time the goods have been delivered on board the vessel, is transferred from the seller to the buyer. ( )

22. Under FCA in Incoterms 2010, the risk of loss of or damaged to the goods is transferred from the seller to the buyer at the time the buyer accepts the goods. ( ).

II. Multiples Choice

1.Each country has to earn _____ to pay for imports.

A．money B. foreign exchange C. cash D. currency

2. 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 the carrier

D. both the exporter and the operator

3. Under ___ , the seller minimizes his obligations while the buyer obtain s the goods at the lowest possible prices.

A. FOB

B. DDP

C. DAT

D. EXW

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

A. DAT

B. FAS

C. FOB

D. EXW

5. 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

6. When the seller only pays freight for the goods up to arrival at the point of destination, the term is ___.

A. FOB

B. CFR

C. DAP

D. CIF

7. 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. DDP

B. CIP

C. CPT

D. CFR

8. ___ may be used for various modes of transport.

A. FCA+CPT+CIP

B. FCA+FOB+EXW

C. FCA+FAS+CIP

D. FCA+CFR+CPT

9. ____ can only be use for waterway transport.

A. CIF+CIP+DAT

B. CFR+CPT+CIP

C. FOB+CPT+CIF

D. CIF+FOB+CFR

10. Under __ trade terms, the risk is transferred form the seller to the buyer when the goods has been loaded on board the ship.

A. FCA+FOB+FAS

B. FOB+CFR+CIF

C. FOB+FCA+CIF

D. FAS+CFR+FOB

11. 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

12. 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 for import

13. In international trade, the commission is usually collected by ___.

A. the seller

B. the buyer

C. the insurance company

D. the intermediary

14. Which one is the price including commission ___.

A. FOBS

B. FOBT

C. FOBST

D. FOBC

15. Which of the following quotation is wrong in the export business ? ___

A. FOB Qingdao USD10.00/pc

B. CIF Liverpool Eur125.00/KG

C. CIF Shanghai HKD 12.25/Dozen

D. FOB Tianjing USD2.00/KG

16. The following are included in CFR and CPT prices expect for ___.

A. production cost

B. freight

C. insurance premium

D. profit

III. Case study

1. A Chinese company offers an American buyer rice at US$2,500 per M/T CFR New York, the

buyer asks for unit price under CIFC5% New York. After checking with the insurer, the seller

finds that the all risks rate and the war risk rate are at 0.5% and 0.03%, respectively, and the insured amount is 110% of the CIF price.

Questions: What unit price should the seller quote in order to maintain the same margin?

2. Company A concluded a transaction in furniture with company B on CFR. The date of shipment stipulated in the contract was by the end of April 15. Company A got the goods ready and shipped them on April 8. As April 8 was Sunday, the staff of Company A didn?t send the shipping advice in time. So company B failed to arrange insurance. Unfortunately, the goods were damaged by fire on the night of April.

Question: who was responsible for the losses? Why?

3. A exported a batch of commodity to B on CIF basis. As the goods were for Christmas sale, B insisted on stipulating the following terms on the contract.

Time of shipment: not later than Oct.31, partial shipment and transshipment prohibited.

Arrival date: not later than Nov.30. Otherwise the buyer is entitled to cancel the contract.

Question: Please analyze the nature of the contract. How would the seller deal with this case?

4. Company A signed a contract with Company B, selling 15 metric tons of spices, US$2,500 per metric ton FOB Guangzhou , shipment in October. On October 16, Company A received the shipping advice, so the export sales staff stocked the goods in a warehouse in Guangzhou port on October 17. But unfortunately, a fire broke out in the warehouse that night, which caused the losses of the goods. Company A had to bear all the losses.

Question: Should Company A bear all the losses if FCA term was adopted? Why?

Subject Matter of Contract

I. True or False

1. Packing should be appropriate for the commodity, for instance, cement requires water-proof package, and packages for glassware should be shock-proof. ( )

2. In terms of systems of weights and measures, China adopts US system due to its being widely applied in the international trade. ( )

3. Packing can only serve as a form of protection. ( )

4. “Gross for net” is often stipulated in the contract to indicate that the weight of the less valued products is calculated by gross weight. ( )

5. The more or less clause is a clause that stipulates that the quantity delivered can be more or less within certain extent. ( )

6. If the articles had great changes in price at the time when delivery is made, the seller may stipulate that settlement for this part is based on the market price at the time when the goods are shipped on board the vessel. ( )

7. Counter sample can help avoid disputes over the quantity of goods in the future transaction. ( )

8. Sale by description and illustration is applicable to those products, which are complicated in structure. ( )

9. If possible, we had better select a package that is never in use in the market. In this way, it can

establish the new image of the company. ( )

10. Quantity tolerance will be stipulated in the contract to indicate that so long as both parties agree, quantity differences can be tolerated. ( )

11. Neutral packing is adopted to break tariff and non-tariff barriers of some importing countries, and tend to be widely adopted by many countries. ( )

12. If one party violates stipulations packing terms, the other party shall have the right to reject the goods and claim for the losses. ( )

13. Different commodities have different qualities, but the same commodity must have the same quality. ( )

14. Packing should be designed according to the need of the cargo. ( )

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

16. The grade of the same product is always the same in different countries. ( )

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

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

19. Generally speaking, more packing is required for containerized consignments. ( )

II. Multiple Choices

1.In sale by sample, if there is no other stipulations on the goods in the contract, then the good s

____.

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

2. The sample made by the seller according to the buyer, and then sent to and confirmed by the buyer is called ___.

A. duplicate sample

B. returning sample

C. original sample

D. counter sample

3. ___ are usually sold by trade mark or brand name.

A. Manufactured goods with steady quality

B. Raw materials

C. Machine and instruments

D. Goods with special shape

4. The methods commonly used to express the quality include the followings except for ___.

A. sale by sample

B. sale by materials

C. sale by descriptions

D. sale by trade mark or brand name

5. 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

6. 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

7. At present, which method is the one that we always take to express quality when we export some handicrafts, clothing and light industry products? ___

A. Sale by sample

B. Sale by specification

C. Sale by grade

D. Sale by name of origin

8. 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.

9. 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

10. The more or less clause is normally used for ___.

A. bulk goods

B. packed units

C. individual items

D. containerized goods

11. Among the following statements about quantity of commodity, which one is not correct? ___

A. Without a certain quantity of goods, any business deal would be groundless.

B. The quantity of the goods delivered should be in conformity with that required in the contract.

C. The quantity of the goods is an indispensable factor in a transaction.

D. The same unit of measurement may not represent different quantities in international trade.

12. ___ are marks of simple designs, some letters, numbers and simple words on packages, often stenciled, that sere as an identification of the consignment to which they belong.

A. Shipping marks

B. Supplementary marks

C. Indicative marks

D. Warning marks

13. Units of measurement are often used in their abbreviated forms in international trade, “lb”refers tp ___.

A. gram

B. ounce

C. pound in weight

D. piece

III. Case Analysis

1. A Shangdong exporter entered into an agreement to sell two metric tons of Chinese peanuts

with a Singapore company. Both the L/C and Sales Contract specified that the peanuts were of grade 3. When preparing goods for shipment, the seller found that grade 3 Shandong peanuts were out of stock. In order to make timely delivery, the seller shipped some grade 2 peanuts bought from other provinces to take the place of the stated peanuts and stated in the commercial invoice that the price stayed unchanged.

Questions: 1) Do you think it is reasonable for the exporter to do this?

2) What kind of risk is there for the seller?

2. A Chinese company concluded a sales contract with an African partner. The packing clause

stated “packing in plywood box, net weight 10 kilograms, and two boxes in a bale, covering with jute bag”. When the L/C arrived, the packing requirement said “packing in plywood box, net weight 10 kilograms, and two boxes in a bale” without he phrase “covered with jute bag”.

The exporter packed the goods as the L/C requested and shipped them. When they arrived, the buyer refused to accept them. ?

Questions: 1) What are the problems in this deal?

2) What should you suggest to the exporter?

3.One company in Beijing planned to export frozen Beijing duck to Iraq. The clause in the

contract is “all ducks should be killed in the Muslim way”. But, in fact, the company doesn?t exactly know the Muslim way, and in the processing, they used another way by killing the

ducks through the mouth and clean the inner parts of the duck. Then they froze the ducks to keep a goods shape. After that, the company got a certificate from an association concerned to certify that they killed the ducks according to the Muslim way without the actual inspection of that association. When the goods reached the buyer, they found that the ducks were not killed in the agreed way and refused to accept the consignment. They broke the contract. The seller should either destroy all the goods or ship them back.

Question: What is the reason of the seller?s loss? What should they do about this?

4. A Chinese company electric fan producer exported 1,000 eclectic fans to South Africa. Both

the contract and the L/C stipulated that partial shipment was prohibited. When the fans were transported to the port for shipment, it was found that 20 fans were damaged and couldn?t be shipped. The consignor decided that according to UCP600. 5% more or less was allowed if the amount didn?t exceed the L/C amount. In the end, 980 fans were delivered to the importer. Question: Was it reasonable for the seller to do so according to UCP600?

5. A bicycle manufacturer based in Shanghai signed a contract with a Hong Kong merchant,

selling 1,000 bicycles. When the countersigned copy returned, the exporter noticed that the merchant had added “C.K.D.” to packing requirement “packed in wooden case”.

Questions: 1) What does “C.K.D.” means?

2) What would you recommend the exporter do?

International Cargo Transportation

I. True or False

1. Sea transport is the most important mode of transport in international trade now. ( )

2. Multimode transport means the goods are carried by at least two modes of transport under at least two multimode transport operators. ( )

3. The consignee can take delivery of the goods by using originals of B/L or copies of B/L signed by the carrier. ( )

4. Bill of lading represents the title to the goods and needs to be handled carefully. ( )

5. Consignment note is used not only for road or rail transport, but also for multimode transport. ( )

6. Merchant vessels can be divided into liners and tramps, and tramps prove to be a more economical means of international cargo distribution. ( )

7. The freight of liners is relatively fixed, while the freight of tramps is mainly determined by the market. ( )

8. For terms marked with “W/M”, the freight is to be calculated on the basis of either weight ton or measurement ton, subject to the higher rate. ( )

9. Consignment note, the most important document for rail transport, is negotiable document that can represent the title to the goods. ( )

10. Containerization, the most popular form of physical international distribution, can substantially reduce costs and raise service quality in the international transit. ( )

11. Bulk cargoes, or shipment that can be carried in conveniently sized containers due to their nature, can be transported in a variety of specialist vessels, depending on the nature of the

consignment, whether it be sugar, coal, timber, foodstuffs or vehicles and so on. ( )

12. In most cases, while port of shipment and port of destination are stipulated in the contract, two or more of each are stated to provide more options for either buyers or sellers. ( )

13. Under FOB term, the seller should notify the buyer of the cargo readiness at least 30 days before the time of shipment so that the buyer can have enough time to charter ships and send them to the shipment port in time. ( )

14. For the lay time clause in the contract, when we are exporters , we should use “weather working days of 24 hours”, which is a common practice in our country. ( )

15. When the chatterer fails to load or unload the goods within the stipulated period of time, he has to pay demurrage to the ship-owner. ( )

16. Time of shipment in a contract can only be a fixed period of time. ( )

17. 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. ( )

18. The notice of shipment under CFR is very important, because the buyer will make out insurance upon receipt of the notice. ( )

19. Partial shipment means that the goods under one contract are shipped in different terms or by different lots. ( )

20. In case it was stipulated in the contract that “shipment is made during July and August”, one lot of goods must be shipped in July while another in August. ( )

21. If there is no direct sail to the destination, that “transshipment shall be allowed”shall be stipulated in the contract. ( )

22. W/M plus Ad V al. means that the highest of them will be collected when freight is calculated. ( )

II. Multiple Choice

1.The characteristics of liner transport are that ___.

A.the liner, 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

2.___ transport is a major mode of transport in terms of capacity, only second to sea transport.

A. road

B. Air

C. Container

D. Rail

3. ___ transport has a high distributive ability of offering a door-to-door service.

A. Air

B. Road

C. Sea

D. Inland waterway

4. 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

5. The operator who signs the multimode transport document is ___.

A. only responsible for the first stage of 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

6. Which stipulation of the date of shipment is often used in a contract? ___

A. one day, such as 1 May

B. within several days after the L/C has been received

C. prompt shipment

D. a time period such as during May

7. 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 of is contracted to be port of destination in case it is difficult to decide

8. The seller usually sends the ___ to the buyer immediately after the goods are loaded on board the ship, advising him or the shipment.

A. shipping advice

B. shipping instruction

C. shipping date

D. shipping port

9. 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

10. 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

11. 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

12. 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

13. ___ 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

14. ___ 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

15. Under ___, only the named consignee at the destination is entitled to take the delivery of the cargo.

A. Blank B/L

B. Order B/L

C. Straight B/L

D. Direct B/L

16. ___ merely confirms that the goods have been handed over to and are in custody of the ship-owner.

A. Shipped B/L

B. Clean B/L

C. Received for shipment B/L

D. Liner B/L

17. Combined transport B/L differs from Through B/L in that ___.

A. only one carrier is involved in Combined transport B/L

B. only one c carrier is involved in Through B/L

C. combined transport B/L is always connected with sea

D. through B/L is not connected with sea

18. 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

19. Under CIF, freight on thee B/L is marked as __.

A. Freight prepaid

B. Freight Collect

C. Freight Pre-payable

D. Freight Unpaid

20. According to general international trade practice, only ___ B/Ls are accepted by banks for payment under a letter of credit.

A. received, clean

B. shipped, clean

C. straight, direct

D. transshipment, order

III. Case study

1. A Shandong exporter received an L/C from its British buyer, saying “400 M/T of Groundnut

Kernels from Qingdao before October 1, 2009. Partial shipments prohibited”. On September 15, just before the shipment, an amendment to the L/C reached the exporter. It read: “shipment changed to 200M/T of groundnut Kernels from Qingdao to London and 200 M/T of groundnut Kernels from Qingdao to Liverpool instead of original stipulation.” The exporter immediately begged the carrier?s favor and shipped 200 M/T on Vessel Wangjiang to London on September 30 and another 200M/T on Vessel Rickmers to Liverpool on October 1. On October 15, the opening bank refused the exporter documents, claming 1) partial shipments were prohibited, and 2) the second shipment was late.

Questions: Is it acceptable for the bank to refuse the exporter?s documents? How should the exporter do in order to avoid loss in such a case? What do you suggest to the exporter?

https://www.360docs.net/doc/184546030.html,pany H exported a shipment of industrial chemicals. The contract stipulated to ship

during March to April. The L/C stipulated to read: “shipment during March/April, 2006”, and without any other wording. But when booking shipping spaces, Company H learned that the spaces were not enough for the large quantity. So it had to ship the goods by several lots. Questions: In such a case, is it necessary to ask for amendment for the shipping clause of L/C?

3. A Canadian customer wants to purchase our products at the price of CAD 800.00 per M/T CIF

Quebec with shipment in December and sight L/C payment.

Question: Can we accept his requirement?

4. A foreign buyer issued an L/C through the bank to stipulate: “1000 drums to be shipped in 5

lots with a separation of 20 days between lots.” Or “1000 drums shipment to be effected in three equal consignments at an interval of 45 days.”

Questions: How can we deal with it?

Marine Cargo Insurance

I. True or False

1. The person who lodges a claim should have the insurable interest in marine cargo insurance. ( )

2. In a normal policy, the compensation payable should be sufficient to restore the insured to the position he was in before the loss occurred, and could be a better position, because an agreed 10 percent had often added to he insured amount. ( )

3. No matter what losses the insured suffers, he can lodge a claim for indemnity form the insurer. ( )

4. Container offers better protection for the goods, so container shipments have a higher premium than break-bulk shipments. ( )

5. The premium charged for the insurance policy is calculated according to the risks involved. ( )

6. According to the usual practices, the insured amount, if not specified in he sales contract, will be 110% of CIF or CIP price. ( )

7. Two types of risks are covered by oceans marine insurance under CIC: perils of the sea and extraneous risks. ( )

8. WPA is a wider cover than FPA in ocean marine cargo clause. ( )

9. In international trade, if All Risks was covered, any losses caused by any reason on the way can be compensated by insurance company. ( )

10. The additional coverage can be taken separately in CIC. ( )

11. The insurance coverage of ICC(A), ICC(B), and ICC(C) is roughly the same as that of FPA, WPA, All Risks under CIC, respectively. ( )

12. It is the best way to choose a wider insurance coverage when covering insurance. ( )

13. Land Transportation Risk is almost equivalent to WPA. ( )

14. When a number of consignments of similar export goods are intended to be covered, open policy is a better method. ( )

15. Generally speaking, the insured amount will not be marked up in an open policy. ( )

16. It should be the exporter?s obligation to take out insurance on minimum cover under CIF or CIP. ( )

17. Although the insurance has been taken out by the exporter, sometimes, the importer still needs extra insurance arrangement for a wider cover. ( )

18. The insured amount should be the actual value of the insured goods plus the expected operating expenses and profits. ( )

19. The date of insurance of B/L should be earlier than the date of issuance of insurance policy. ( )

20. Cargo transport insurance is usually taken out on “warehouse to warehouse” basis. ( )

II. Multiple Choice

1.___ is the practice of sharing among many persons that would otherwise suffered by only a

few.

A. Trade

B. Transportation

C. Insurance

D. Description

2. 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

3. 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

4. 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

5. WPA was covered for an exporting goods, and part of the goods were 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

6. 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

7. 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 for the freight

8. 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.

9. Under CIC, general additional risks include the following except for ___.

A. Risks of Shortage

B. TPND

C. Failure to delivery

D. Risks of odor

10. Basic coverage of marine cargo insurance under CIC includes the following except ___.

A. FPA

B. War Risks

C. WPA

D. All Risks

11. The insurance policy or certificate will be issued by the insurance company after the insured pays ___.

A. freight

B. premium

C. cost

D. expenses

12. According to the practice of the international insurance market, cargoes are generally insured for ___ of CIF basis,

A. 110%

B. 120%

C. 130%

D. 140%

13. The insured amount for a CIF contract usually covers the following except for ___.

A. freight

B. insurance premium

C. expected profits

D. import duties

14. Where the contract between the exporter and the foreign importer is FOB contract, it is the ___ responsibility to insure the goods. If the goods are contracted to be sold on CIF basis, then it is the ___ turn to take out the policy and pay the costs of insurance.

A. importer?s, exporter?s

B. Exporter?s, exporter?s

C. exporter …s, importer?s

D. Importer?s, importer?s

15. It?s the same as the practice in international market that the period of the obligations nof marine cargoes insurance in our country is from ___.

A. door to door

B. desk to desk

C. warehouse to warehouse

D. port to port

16. The goods was exported under CIF, but the whole goods disappeared because of the accident, them 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

17. 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 goods faith

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

18. 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

19. 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

20. Aside from the risks covered goods caused by heavy weather, lighting, tsunami, earthquake and/or flood.

A. actual total losses

B. constructive total losses

C. particular average

D. general average

III. Calculation

1.The value of an export was USD 10,000, the insurance rate was 0.8%, and the insured amount

was 110% of the contract value. How much was the insurance premium and the insured amount in the case?

2.An export company quoted the contract price at GBP 10,000 CIF London per M/T and the

insured amount was 110% of the invoice value. The importer requested the company quote a new price under CFR. How much should the exporter quote to insure his profit stay the same?

IV. Case Study

1. There are a lot of accidents which took place in the Somalia area where pirates often hijack ships of all kinds and asks for ransom. For example, there is a piece of news titled with “Pirates free Spanish hostages”, it reads, “As a Spanish warship looked on, a $3.3 m. ransom was delivered by boat Tuesday and Somali pirates freed a Spanish traveler and its 36 crew members. They had been captives for more than 6 weeks, the AP reported. Somali pirates attacked 2 more ships Monday and still hold about a dozen ships with more than 200 crew members, including a Chinese bulk carrier and its 25 Chinese crew members”. “Somali pirates said Thursday they had received a $

2.6 m. ransom and will soon release a Greek ship and its 24 Ukrainian crewmembers. The ship has been held by the pirates for more than 6 months”. (China Daily 2009-12-10) According to the insurance clause, there is either no coverage to cover such a risk, or the premium of pirate hijacking is very high.

Question: How to solve this problem to reduce the risks brought by pirates and to smooth the development of international trade?

Some governments toke measures to protect the ships crossing such an area, like “Turkish navy commandos detained 5 pirates trying to hijack a Greek boat in the Gulf of Aden, the Turkish military said Thursday”. (China Daily, 2009-11-07)

Question: What do you think of this measure?

2. Six sailor from the DPKR are missing after their cargo ship sank off the coast of Dalian Tuesday due to strong winds, Xinhua reported. Chinese marine authorities have launched a search for the missing sailors. (China Daily, 2009-11-18)

Question: Is this a kind of marine charges (sue and labor charges or salvage charges)?

3. A Chinese company exported some wheat to Denmark. The price term employed was CIF Copenhagen. During transshipment in India, part of the cargo was soaked by heavy rain. When the ship arrived at the port of destination, the importer claimed compensation form the insurance company. However, the insurance company refused to compensate claiming that the damages caused by rain was not included in WPA coverage.

Question: What conclusion can be drawn from this case?

International Payment

I. True or False

1. The writer of a draft is the drawer and the draft is often accepted by the exporter. ( )

2. In the case of a deferred payment credit, there is no need to draw a draft. ( )

3. The bank has the right of refusing to pay if the documents are presented later than the validity of L/C. ( )

4. The documentary bill is a bill accompanied by the contract between the drawer and the drawee. ( )

5. Protest is a document made by the payee testifying that the drawee has dishonored the bill. ( )

6. If the payment is to be made “30 day?s sight”, it means that the payment will have to be made 30 days after the issuing of this draft. ( )

7. Exporters always insist on payment by cash in advance when they are trading with old customers. ( )

8. Unlike the bill of exchange, the promissory note has two parties: the maker and the payee. ( )

9. A crossed check can only be paid to individuals instead of banks. ( )

10. The issuing bank bears the prime liability for payment in the letter of credit. ( )

11. In L/C settlement, banker?s negotiation is merely based on L/C and documents instead of contracts and goods. ( )

12. Banks deal in documents instead of goods; therefore, they are only concerned that documents presented appear on their face to comply with the terms and conditions of the documentary credits. ( )

13. So far, documentary credits are the most ideal method of payment to provide security for both buyers and sellers. Therefore, in whatever conditions, L/C should be the first consideration in the method of payment for transactions. ( )

14. The credit is legally independent of the underlying transactions. ( )

15. A letter of credit is a conditional undertaking to make payment in the case of conformity. ( )

16. An issuing bank must always reimburse the advising bank if the latter pays the credit. ( )

17. After issuance of the letter of credit, the issuing bank may refuse payment if the applicant becomes bankrupt. ( )

18. In any disputes over the terms and conditions of a credit, international law will be referred to

for interpretation. ( )

19. Confirmation to credit may be given by an advising bank at the request of the issuing bank. ( )

20. The L/C should arrive at the seller several days before the time of shipment. ( )

21. In a documentary credit, terms such as “divisible”, “assignable”, and “transmissible” carry the same meaning and have the same effect as the term “transferable” and are interchangeably used with such a term. ( )

22. When a letter of credit is confirmed, all of the risks are then borne by the confirming bank free of charge. ( )

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

24. The buyer will inform the seller the opening of L/C and pass the L/C to the seller. ( )

25. An L/C is an irrevocable one if it does not stipulate whether it is irrevocable or revocable according to UCP600. ( )

26. The issuing bank should be located in the importer?s country, while the advising bank should be located in exporter?s country. ( )

27. The sum of the transferred credit will not be the same as in the credit before transfer. ( )

28. Generally speaking, it is necessary for the buyer to clearly specify a period of validity of the L/C when applying for the opening of L/C. ( )

29. The payee and the drawer of a draft used in international trade must be the same person, that is, the exporter. ( )

30. Under the terms of D/A, it is the bank in exporter?s country who makes acceptance to the draft and delivers the documents to the importer. ( )

II. Multile Choice

1.Which one of the following is not the means of remittance? ___

A. L/G

B. M/T

C. T/T

D. D/D

2. T/T means ___.

A. mail transfer

B. Telegraphic transfer

C. demand draft

D. letter of credit

3. which means of international payment is a kind of bank credit? ___

A. Remittance

B. Collection

C. L/C

D. D/D

4. Which of the following L/C means double guarantee for the beneficiary? ___

A. Revocable L/C

B. Documentary L/C

C. Confirmed L/C

D. Transferable L/C

5. As to confirmed L/C, the payment responsibility of confirming bank is __.

A. primary

B. secondary

C. third

D. Documentary

6. 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

7. A check is a kind of ___ drawn on a banker.

A. sight draft

B. time draft

C. sight promissory note

D. time promissory note

8. D/P at sight means ___.

A. documents against payment after sight

B. document against payment at sight

C. documentary collection

D. document against acceptance

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

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

10. In international trade, a L/C is commonly used for the payment of the purchase price. It?s made by the ___.

A. seller

B. seller?s bank

C. buyer

D. buyer?s bank

11. which one of the followings transport documents is the title of the goods in the foreign trade?___

A. Railway bill

B. B/L

C. Consignment Note

D. Packing List

12. If the expiry date of the L/C is before Dec.31, and the latest shipment date is before Dec.10, while the expiry date for presenting documents is within 15 days after the transport documents being signed and the date of shipment is Dec. 10, then the latest date of documents being negotiated is before ___.

A. Dec. 10

B. Dec. 25

C. Dec. 20

D. Dec. 31

13. 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

14. A ___ is defined as “an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand, or at a fixed or determinable future time, a certain sum in money, to or to the order of a specified person, or to bearer.”

A. cheque

B. commercial invoice

C. Bill of exchange

D. promissory note

15. 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

16. As to the following documents, which of them can not be refused by the bank? ___

A. documents submitted later than expiry date for presentation of documents

B. documents submitted 15 days later than the date of shipment, but less than 21 days

C. documents whose content is not in conformity with L/C

D. there is discrepancy between the documents

17. the issuing date of B/L is July 15, the expiry date of L/C is August 15th and 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

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

A. The capital and figures of the sum of the money on L/C must be unanimous

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

C. the money of draft can?t exceed that of L/C

D. If more or less clause is stipulated in the contract, there should be relevant regulations on the sum of money of L/C

19. In L/C settlement, banker?s negotiation is merely based on ___,

A. application of opening L/C

B. contract and documents

C. documents and L/C

D. goods and documents

20. In international trade, the letter of credit, remittance and collection belong to __ respectively.

A. commercial credit, commercial credit and banker?s credit

B. commercial credit, banker?s credit and commercial credit

C. banker?s credit, commercial credit and commercial credit

D. commercial credit, banker?s credit and banker?s credit

21. Under ___ term, the seller draw a usance draft. The collecting bank presents the usance draft and shipping document at maturity of the draft. When receiving the money from the buyer, the collecting bank hands over the shipping documents to him.

A. D/P at sight

B. D/P after sight

C. Usance letter of credit

D. D/A

22. ___ cannot be modified, amended or withdrawn by either the opening bank or the buyer before the expiry date of the credit validity without the agreement of the beneficiary.

A. an irrevocable L/C

B. a confirmed L/C

C. a transferable L/C

D. a revolving L/C

23. The parties in the bill of exchange includes ___.

A. seller, payee and drawer

B. drawee, payer and drawer

C. drawer, drawee and payee

D. drawee, payer and payee

III. Case study

1. Company A exports goods on FOB basis and the amount in contract is USD14,500.00 payment is the L/C. But the L/C does not contain unit price, in such case, the amount in the L/.C is USD15,000.00 and shipment must be made in one lot.

Questions: Will A collect money smoothly? Why?

2. Company B exported to Australia a certain bicycles on irrevocable sight credit basis. The L/C reached the seller in due time. It stipulated that the drawee of draft was the opening bank (applicant). B neglected this clause and prepared for the goods, and shipped the goods within agreed time. But the opening bank rejected payment when the beneficiary presented full set of documents due to the applicant?s non-payment.

Question: Is the opening bank?s act reasonable? Why?

3. An irrevocable credit amounted to USD1,000,000.00, allowing partial shipments and installments. The seller had made USD50,0.00.00 worth of goods against the L/C. But the negotiating bank received the opening bank?s revocation telex of credit on the next day after negotiation.

Question: Did the opening bank have the right to reject to pay negotiating bank?s value for USD50,000.00? Why?

Inspection, Claim, Force Majeure and Arbitration

I. True or False

1. Risks in transit in respect of the quality and the quantities of the goods shall be born by the buyer if required the inspection at the factory in the exporting country. ( )

2. In the inspection standard, if the trade is conducted against the sample, the inspection shall be performed simultaneously according to the sample provided. ( )

3. The agency to inspect the commodities in international trade must be decided by the seller and the buyer. ( )

4. when EXW or DDP is used, the commodity inspection is generally inspected in the exporting country. ( )

5. All export commodities should be inspected by commodity inspection bureau. ( )

6. Landed quality and weight means that the inspection carried out at the port of destination will be final. ( )

7. For one contract, the same method of inspection should be used for inspection and reinspection to avoid disputes. ( )

8. Inspection by manufacturer himself and the certificates of inspection issued by him are usually require in the sales contract. ( )

9. Goods shall firstly meet the standards stipulated in laws and regulations when inspection standards are specified by laws and regulations. ( )

10. There is no need to inspect the goods which do not need legal inspection. ( )

11. The export goods shall be inspected after shipment. ( )

12. If the inspection certificates are overdue, the goods concerned need to be reinspected. ( )

13. Import commodity subject to legal inspection can not be marketed or used before being inspected. ( )

14. The inspection commodity authorities shall go through the procedures for inspection and issue

a certificate without delaying shipment. ( )

15. Sometimes, the inspection certificates are necessary for claiming compensation. ( )

16. In China, State Administration of Import and Export Commodity Inspection is in charge of the inspection of import and export commodities throughout the country. ( )

17. In practice, for 0.5% of weight difference in inspection results at ports of shipment and destinations, inspection result at the port of shipment can be considered final or the difference can be divided between the buyer and the seller. ( )

18. In foreign trade, the import or export contract provides legal basis for determining the rights and obligations of the seller and the buyer. ( )

19. Breach of contract arises where any party of a contract does not abide by the stipulations of the contract. ( )

20. Once made, the arbitral award is the final decision and has the force of law. ( )

21. Arbitration has not become the most popular method in international trade to settle disputes. ( )

22. The most satisfactory way for a seller and buyer to settle disputes is by means of arbitration. ( )

23. Once the payment of penalty is made, the contract is no longer to be performed. ( )

24. In international commodity sales contract, penalty and compensation for the losses is the same thing. ( )

25. The seller should bear the loss caused by Fore Majeure. ( )

II. Multiple Choice

1.“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 shipment

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 landed quality as final

2.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 to make

reinspection at the port of destination to take landed quality as final.

3.An exporter delivered the goods on CIF basis according to the stipulations of the contract, and

submitted clean B/L to the importer. After receiving the goods, the importer found that the goods are damaged because of the damages 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

4. 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

5. 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

6. The necessary condition of settling disputes through arbitration is that ___.

A. The seller and the buyer have an arbitration agreement or an arbitration clause in the contract

B. the seller and the buyer have contract

C. the case can?t be settled through conciliation

D. one party comes to nothing through litigation

7. 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

8. If the sales contract between a Chinese company and Japanese company stipulated that the arbitration shall be conducted 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

9. An arbitration clause should specify the following points except for ___.

A. an arbitration agency

B. a location for arbitration

C. the number of arbitrators

D. an arbitration award

10. In international trade, the best method of settling disputes is ___

A. conciliation

B. lawsuit

C. Arbitration

D. Litigation

III. Case Study

1. A total of 114 consignments of imported food and cosmetics were rejected after being found substandard during inbound test, the General Administration of Quality Supervision, Inspection and Quarantine said Tuesday. The product include 7.56 tons of kjedlsens butter cookies rejected for excessive bacteria. All unsafe product were returned or destroyed, the administration said. (China Daily, 2009-11-05)

Question: What lessons can we get from such a case to conduct an international trade?

2. Company A signed a sales contract with company B stipulating that the seller should present quality inspection certificate by SGS while the buyer retains the right to reinspect after the goods arriving at the port of destination. A shipped the goods on time and presented all documents. After examination by inspection authority X in the importing country, B found that the quality does not comply with the contract. Therefore, B stated that he would pay less for the whole goods but it was rejected by A. A hold the view that the inspection authority X is not authoritive enough, and didn?t accept the inspection result.

Questions: Did A have the right to refuse the report and refuse to reduce the price? What should be done further to resolve the problem? What kind of lesson can we draw from the case?