Export LC

1. What does LC stand for in export trade?

a) Loan Certificate b) Letter of Credit c) Legal Contract d) Local Charge

2. Which body governs documentary credits internationally?

a) WTO b) ICC c) IMF d) UNCTAD

3. UCP 600 is published by which institution?

a) ISO b) IMF c) ICC d) BIS

4. What is the main purpose of an LC?

a) Reduce export taxes b) Secure payment c) Provide transport insurance d) Lower freight rates

5. Which article in UCP 600 defines “Complying Presentation”?

a) Article 2 b) Article 4 c) Article 15 d) Article 5

6. Who issues a Letter of Credit?

a) Exporter b) Importer’s bank c) Exporter’s bank d) Chamber of Commerce

7. Who is the beneficiary in an LC?

a) Importer b) Exporter c) Carrier d) Insurer

8. Which type of LC cannot be changed without all parties’ consent?

a) Irrevocable LC b) Revocable LC c) Back-to-back LC d) Red Clause LC

9. What is the meaning of “sight LC”?

a) Payment after 90 days b) Payment on presentation c) Payment after shipment d) Payment after bill of entry

10. Which is NOT a type of LC?

a) Revolving LC b) Red Clause LC c) Transferable LC d) Open LC

11. In a transferable LC, who can transfer it?

a) Applicant b) Issuing bank c) First beneficiary d) Second beneficiary

12. What is the role of the advising bank?

a) Issues LC b) Confirms LC c) Notifies beneficiary d) Checks goods

13. Confirmed LC adds guarantee from which party?

a) Customs b) Beneficiary c) Confirming bank d) Carrier

14. Which document proves shipment?

a) Certificate of Origin b) Bill of Lading c) Invoice d) Packing List

15. Under UCP 600, how many days do banks have to examine documents?

a) 5 banking days b) 2 banking days c) 7 banking days d) 3 banking days

16. Which article of UCP 600 covers presentation?

a) Article 2 b) Article 14 c) Article 4 d) Article 28

17. ISBP stands for:

a) International Ship Billing Protocol b) International Standard Banking Practice c) International Shipping Bank Procedure d) International System for Bank Payments

18. Red Clause LC allows advance to:

a) Issuing bank b) Beneficiary before shipment c) Carrier d) Applicant

19. What does “LC at 90 days usance” mean?

a) Pay at sight b) Pay after 90 days from BL date c) Pay before shipment d) Pay after invoice date

20. Which bank checks documents for compliance?

a) Issuing bank b) Central bank c) Customs d) Insurance company

21. A bill of exchange is also called:

a) Promissory note b) Invoice c) Packing list d) Draft

22. A transferable LC can be transferred how many times unless restricted?

a) Once b) Twice c) Unlimited times d) Thrice

23. What does “applicant” mean in LC terms?

a) Exporter b) Buyer/Importer c) Advising bank d) Carrier

24. A back-to-back LC is used generally for:

a) Confirming banks b) Revolving shipments c) Middlemen to finance transactions d) Open account sales

25. Which document certifies the goods’ origin?

a) Bill of Lading b) Certificate of Origin c) Invoice d) Insurance policy

26. Force majeure clause in LC context deals with:

a) Payment terms b) Inspection c) Shipment packaging d) Unforeseen events preventing performance

27. A sight draft must be paid:

a) On presentation b) After 90 days c) Before shipment d) After customs clearance

28. A clean bill of lading means:

a) No goods on board b) No mention of damage or defects c) Carrier refused to load d) It is for local transport only

29. A discrepancy in documents leads to:

a) Automatic payment b) Immediate shipment c) Invoice cancellation d) Bank may refuse payment until resolved

30. A negotiable document allows:

a) Transfer of title b) Only one-time use c) No presentation to banks d) It cannot be endorsed

31. An irrevocable LC can be amended only with:

a) Beneficiary consent b) Agreement of all parties c) Issuing bank’s unilateral decision d) Applicant’s request only

32. SWIFT messages are used in LC transactions primarily for:

a) Physical transport of documents b) Customs clearance c) Secure bank communications d) Shipment booking

33. A revolving LC is useful for:

a) Single shipment only b) Multiple shipments over time c) Cash-in-advance deals d) Domestic trade only

34. The issuing bank is located in the:

a) Beneficiary’s country b) Advising bank’s country c) Confirming bank’s country d) Applicant’s country

35. A standby LC is primarily used as:

a) Guarantee of payment if primary fails b) Regular payment instrument c) Shipping document d) Insurance policy

36. Incoterms are published by:

a) IMF b) ICC c) WTO d) UNCTAD

37. “On board” notation on B/L indicates:

a) Goods not yet shipped b) Goods are at port only c) Goods have been loaded on vessel d) Carrier refused to accept goods

38. A commercial invoice must include:

a) Bank’s confirmation b) Issuing bank details c) Certificate of origin d) Description and value of goods

39. Force majeure events typically include:

a) Natural disasters b) Payment delays c) Packaging errors d) Minor administrative mistakes

40. Insurance document under LC should be:

a) Verbal confirmation b) Named and quantifiable c) Not required d) Issued by the consignee

41. A negotiable B/L is also known as:

a) Order B/L b) Sea waybill c) Express release d) Delivery order

42. A non-negotiable B/L cannot be:

a) Used for title transfer b) Presented to bank c) Signed by carrier d) Endorsed

43. Letter of indemnity (LOI) is used to:

a) Replace LC entirely b) Request carrier to release goods without original B/L c) Serve as invoice d) Confirm customs duties

44. Discrepancy fee is charged when:

a) Documents do not comply b) Payment delayed by applicant c) Goods are damaged d) Transport cost increases

45. An advising bank usually acts on behalf of:

a) Applicant b) Confirming bank c) Issuing bank d) Consignee

46. The beneficiary must present documents within how many days of shipment per many LCs?

a) 60 days b) 21 days c) 10 days d) 90 days

47. A partial shipment clause allows:

a) No shipments b) One consolidated shipment only c) Multiple shipments under same LC d) Shipment only by air

48. A prohibited clause in LC might forbid:

a) Transshipment b) Insurance c) Packaging d) Invoicing

49. A draft payable at usance means:

a) Payment at sight b) Payment before shipment c) Payment only by beneficiary d) Payment after specified period

50. A bill payable to order can be:

a) Non-negotiable b) Endorsed to others c) Only paid to bank d) Not used in LC

51. Seaway bill differs from B/L because it is:

a) Non-negotiable and not required for title transfer b) Always negotiable c) Used for air freight d) Issued by consignee

52. A commercial invoice should state:

a) Bank’s internal codes b) Only buyer’s name c) Value, quantity and description of goods d) Only transport details

53. Loading port is mentioned on which document?

a) Insurance policy b) Bill of Lading c) Invoice only d) LC application

54. A beneficiary may be asked to provide which of these to prove quality?

a) Inspection certificate b) AWB c) Packing list only d) Consignee signature

55. A bill marked “freight prepaid” means:

a) Freight to be paid at destination b) Carrier pays freight c) Freight included in invoice but unpaid d) Freight paid by shipper at origin

56. An LC subject to UCP 600 means:

a) UCP 500 applies b) UCP 600 rules govern interpretation c) Incoterms are void d) No bank involvement

57. A beneficiary’s indemnity may be required when:

a) Documents are surrendered without originals b) LC is revoked c) Applicant defaults d) Goods are defective

58. “Negotiation” of documents by a bank means:

a) Banks negotiate shipping terms b) Banks change documents c) Bank pays/accepts documents and advances funds d) Parties negotiate prices

59. “Confirmed and irrevocable” LC offers:

a) No bank guarantees b) Beneficiary’s promise only c) Applicant’s assurance only d) Strong bank guarantee by issuing and confirming banks

60. A clause “after shipment” in LC refers to presentation after:

a) Payment b) Date of shipment c) Insurance claim d) Customs clearance

61. An “on demand” guarantee can be claimed:

a) Immediately upon demand b) After 90 days only c) Only by beneficiary’s bank d) Only after arbitration

62. “Transshipment allowed” means:

a) No transfer between carriers b) Shipment only by rail c) Goods may be transferred between ships en route d) Goods must remain on original vessel

63. “To order” on a B/L means cargo is consigned to:

a) Named consignee only b) The order of consignee and can be endorsed c) Carrier only d) Customs

64. A “documentary credit” is:

a) A transport document b) A sales contract c) A customs declaration d) A bank’s undertaking to pay on documents

65. A “draft at 60 days” is payable:

a) 60 days after sight or date specified b) On shipment c) Only after goods arrive d) Never payable

66. “Clean” document vs “dirty” document refers to:

a) Colour of paper b) Whether documents show marks of damage or not c) Bank preference d) Legal status

67. The term “consignee” refers to:

a) Seller b) Issuing bank c) Person to whom goods are consigned d) Carrier

68. A Clean on Board B/L indicates:

a) Goods are damaged b) Goods not loaded c) Carrier has not signed d) Goods have been loaded without apparent damage

69. “Non-documentary credit” refers to payment conditioned on:

a) Documents only b) Other terms like performance or inspection report c) Transport only d) Bank’s discretion

70. A SWIFT MT700 relates to:

a) Issuance of documentary credit b) Payment advice c) Electronic invoice d) Insurance claim

71. “Partial shipment not allowed” means:

a) Multiple deliveries allowed b) Only one shipment should be made c) Shipment can be by any mode d) Shipment must be insured

72. A “time LC” is payable:

a) On sight b) Only on shipping date c) At a future specified date d) Never

73. “Confirmed” LC means confirming bank:

a) Issues LC b) Adds its own undertaking to pay c) Acts as consignee d) Insures goods

74. A beneficiary must ensure documents are:

a) In strict compliance with LC terms b) Sent after payment c) Endorsed by applicant d) Not required

75. A “consignor” is:

a) Receiver of goods b) Carrier c) Bank d) Sender of goods

76. A “documentary collection” differs from LC because:

a) It guarantees payment by bank b) It uses SWIFT MT700 c) Bank acts as intermediary but doesn’t guarantee payment d) It is not used in trade

77. A “sight draft” is presented to:

a) Customs b) Drawee for immediate payment c) Carrier d) Insurer

78. A “non-transferable” LC excludes:

a) Transfer by beneficiary to another b) Payment c) Shipment d) Inspection

79. A “blank endorsed” bill means it has been endorsed:

a) To a named party b) With restrictions c) With bank guarantee d) In blank so bearer can claim

80. A bill of sight commonly requires which document to be presented?

a) Insurance claim b) Transport documents like B/L c) Applicant’s passport d) Packing list only

81. “All risks” insurance covers:

a) Most risks except listed exclusions b) No risks c) Only theft d) Only transit delays

82. “Beneficiary’s invoice” must tally with:

a) Insurance policy b) Applicant’s order c) Other presented documents d) Only packing list

83. An LC may be issued “subject to availability of funds” when:

a) Beneficiary requests extra guarantee b) Issuing bank faces credit constraints c) Applicant is bank d) Always the case

84. “Transhipment not allowed” restricts:

a) Sea carriage b) Multiple invoices c) Partial shipments d) Changing vessel en route

85. A freight forwarder usually issues:

a) House B/L b) Insurance policies c) Certificates of origin d) LC confirmations

86. “To order of bank” on B/L means bank can:

a) Refuse payment b) Endorse and negotiate cargo c) Act as carrier d) Insure goods

87. A “freight collect” marking means:

a) Shipper pays at origin b) Freight included in LC c) Consignee pays freight at destination d) Carrier pays freight

88. Packing list helps in:

a) Customs clearance and identifying packages b) Bank confirmations c) Insurance only d) Payment

89. A “consular invoice” may be required for:

a) Internal bank records b) Some importing countries’ customs formalities c) Insurance claims only d) Freight calculations

90. An “air waybill” is:

a) Negotiable title document b) Issued by shipping line c) Transport document for air cargo, typically non-negotiable d) Insurance policy

91. “Beneficiary’s statement” commonly asserts:

a) Bank solvency b) Applicant’s credit rating c) Transport route d) That documents presented are genuine

92. “Freight prepaid to destination” means freight is paid:

a) By consignee at destination b) By shipper at origin covering to destination c) By bank d) Not payable

93. A “shipping guarantee” is issued by bank to allow:

a) Release of cargo without original B/L b) Insurance reimbursement c) Payment extension d) Customs hold

94. A “switch bill of lading” is used to:

a) Make B/L negotiable b) Cancel insurance c) Replace original B/L with a new one for routing or commercial reasons d) Change cargo description

95. “By order of” on a document indicates:

a) Only consignee can claim goods b) The named party or their order may endorse c) Mandatory bank confirmation d) No endorsement allowed

96. “Presentation” in LC terms means:

a) Shipment of goods b) Bank issuing LC c) Applicant closing LC d) Submission of documents to bank for payment

97. “Clean on board” differs from “clean” by specifying:

a) Insurance details b) That goods are loaded on board ship c) Consignee identity d) Bank’s confirmation

98. A “combined transport” B/L covers:

a) Multiple modes of transport under one document b) Only sea transport c) Only air and road d) Only inland transport

99. A “telex release” allows:

a) Immediate cancellation of LC b) Bank to refuse payment c) Release of cargo without surrendering original B/L at destination d) Change in consignee name only

100. The “drawer” of a bill of exchange is:

a) Drawee b) Person who creates the bill c) Bank only d) Carrier

EXPORT LC QUIZ — SET 1 (Q1–100)