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45. Bills of lading are meant to be:
a. Substitutes for money.
b. A means of transferring goods to buyers.
c. Sight drafts.
d. Guarantees for payment of the goods.
46. There are many different types of bills of lading. The one that the book advises that most buyers insist the seller
provide is:
a. A straight bill of lading.
b. An on-board bill of lading.
c. A received-for-shipment bill of lading.
d. A clean, on-board bill of lading.
47. The type of bill of lading not recommended for the shipment of perishable goods is:
a. A received-for-shipment bill of lading.
b. An on-board bill of lading.
c. A negotiable bill of lading.
d. A straight bill of lading.
48. The documentary collection is the process by which:
a. Buyers collect their goods at the port of entry.
b. Carriers consolidate cargo for shipment on a vessel.
c. Banks collect payment from the buyer.
d. Sellers must place their account into the hands of a debt collection agency in order to obtain payment from the
buyer.
49. Which of the following documents are always required in a documentary collection for the sale of goods:
a. The draft, invoice, and bill of lading.
b. The invoice, bill of lading, and delivery order.
c. The certificate of origin, insurance policy, and invoice.
d. The draft, insurance policy, and invoice.
50. A good faith purchaser is one who purchases a document of title:
a. For value, in good faith, in the ordinary course of business.
b. For value, in good faith, directly from the seller.
c. In good faith and by endorsement from the seller's bank.
d. With understanding that the seller had acted in good faith in selling the goods.
51. B is known in the trade as a trader and merchant of soybeans. A entrusts a load of soybeans to B for storage in B's
warehouse. Secretly, B delivers the goods to an ocean carrier in return for a bill of lading. B then sells the document
covering a shipment of soybeans to C, who has purchased soybeans from B in the past. C pays for the document
through its bank. B absconds with the money. In this case:
a. A may demand return of the soybeans from C.
b. C has greater rights in the soybeans than A.
c. A's only remedy is against the ocean carrier.
d. C's bank is liable for committing a conspiracy against A.
52. B is known in the trade as a trader and merchant of soybeans. A entrusts a load of soybeans to B for storage in B's
warehouse. Secretly, B delivers the goods to an ocean carrier in return for a bill of lading. B then sells the document
covering a shipment of soybeans to C, who has purchased soybeans from B in the past. C pays for the document
through its bank. B absconds with the money. In this case:
a. B is guilty of a crime under the Uniform Commercial Code.
b. C is probably not a good faith purchaser.
c. C takes paramount title.
d. B and the carrier are liable for a conspiracy to commit fraud.
53. A entrusts a shipment of eel skins to an ocean carrier and obtains a bill of lading. The carrier delivers the goods to B
without asking B to produce the document. Without knowledge of what has occurred, A sells the bill of lading to C,
who is a good faith purchaser. In this case:
a. C may not reclaim the goods because they have already been delivered by the carrier.
b. C has a cause of action against the carrier for misdelivery.
c. C has a cause of action against A for fraud.
d. The carrier is liable for a crime committed against A.
e. All of the above.
54. As decided in the case presented in the text, Biddel Brothers v. E. Clemens Horst Co., under a C.I.F. sales
contract:
a. The buyer has no right to inspect the goods before payment but is obligated to pay upon the presentation of
the proper documents.
b. The buyer has the right to inspect the goods prior to paying for them upon the presentation of the proper
documents.
c. The buyer has no right to inspect the goods and no obligation to pay upon the presentation of the proper
documents.
d. The buyer has the right to inspect the goods and no obligation to pay upon the presentation of the proper
documents.
55. In Basse and Selve v. Bank of Autralasia, the seller submitted a phony sample of ore to an inspection company to
obtain a Certificate of Analysis showing high- grade ore. On the basis of the certificate, the seller paid for the
documents and took delivery of the ore. The ore turned out to be worthless. The court ruled that:
a. The bank had an obligation to inspect the ore before paying for the documents on behalf of the buyer.
b. The buyer had a cause of action against the chemist for fraud.
c. The bank had acted properly in paying the seller even though the ore did not conform to the contract because
the certificate was regular on its face.
d. The bank had acted properly in paying the seller because the bill of lading was negotiable.
56. The two types of contracts named for the point at which responsibility for loss is transferred from seller to buyer is:
a. Point of import, point of export.
b. Origination, destination.
c. Destination, shipment.
d. None of the above; the seller always assumes the risk of shipment.
57. Seller in Georgia and buyer in the Netherlands enter into a contract for the sale of goods, CIF port of Amsterdam.
The seller refused to ship. The buyer brings an action for damages. In the United States, a court would probably rule
that:
a. The seller was correct in not shipping until payment was received.
b. The damages should be measured by the difference between the contract price and the market price of the
goods at the port of shipment.
c. The damages should be measured by the difference between the contract price and the market price of the
goods in Amsterdam at the time the documents would have been presented to the buyer for payment.
d. None of the above.
58. The risk of loss in a contract passes to the buyer when the goods are tendered to the buyer at that place; and
the risk of loss in a(n) contract passes to the buyer when the goods are delivered to the carrier at the port or
place of origin.
a. Shipment; destination.
b. Point of import; point of export.
c. Destination; origination.
d. Destination; shipment.
59. If the seller wishes to make his goods available to the buyer at his place of business with the buyer arranging all
transportation and bearing all risks from the time the goods leave the seller's door, the seller should quote his prices:
a. Ex carriage.
b. CIF seller's factory.
c. Ex factory.
d. FAS seller's dock.
e. None of the above.
60. If the seller in Omaha wishes to place the goods in the hands of a trucking company named by the foreign buyer and
have the risk of loss pass to the buyer at that time, the seller should quote his prices:
a. FAS Omaha.
b. CIF seller's plant.
c. FOB port of shipment.
d. FCA Omaha.
e. None of the above.
61. The government of Venezuela is purchasing a large quantity of American beans to be loaded on its own ship at the
port of New Orleans. The buyer will arrange to have its vessel loaded and will obtain its own export licenses. The
seller may be asked to quote its prices:
a. FOB New Orleans.
b. CIF Venezuela.
c. FAS Venezuelan vessel.
d. DEQ Venezuelan port.
e. None of the above.
62. An importer in Germany requests a price quotation from a cotton broker in Memphis. The broker wishes to place the
cotton in the hands of a multimodal terminal operator in Memphis for shipment through the port of New Orleans. He
will pay the freight charges through to the German seaport, but he wishes the risk of loss to the cotton to pass to the
German importer as soon as he places the cotton in the hands of the multimodal terminal operator in Memphis. The
broker should quote his prices for the cotton:
a. CIF Germany.
b. FOB New Orleans.
c. CPT New Orleans.
d. Ex Factory.
e. None of the above.
63. In an effort to satisfy an important customer in Portugal, the seller is willing to pay all ocean freight charges and bear
all risks of the journey to the port of Lisbon. The buyer, however, has agreed to pay all unloading charges. The
exporter should quote his prices:
a. DES Lisbon.
b. FAS Lisbon.
c. CIF Lisbon.
d. DEQ Lisbon.
e. None of the above.
64. Under which International Commercial Term is the lowest quoted price per unit.
a. FOB
b. CNF
c. EX:Works
d. DAS
65. Rich Maes contracts to deliver bison meats to David in Spain on a destination international commercial term.
However, while five (5) days out in the Atlantic Ocean, the ship carrying the bison meats sinks due to extreme
storm. Under the destination designation the risk of loss is with
a. Seller
b. Buyer
c. Carrier
d. Ship manufacturer
66. When goods are to be transported by more than one mode of transportation.
a. unimodal
b. FAS
c. DAS
d. multimodal
67. In a global trade transaction, Dicky ships goods under a clean bill of lading and submits all the necessary documents
under a documentary letter of credit to the buyer Joe to his bank. While on traveling to Turkiye in the Mediterranean
Sea sinks. Is Dicky entitle to receive payment despite the loss of the cargo?
a. As long as all necessary documents are in order when submitted
b. Dicky absorbs the risk of loss
c. Carrier is liable for the loss
d. None of the above.
68. What are the benefits and possible detriments of using an inspection firm?
69. Compare and contrast the instances in which an individual holding a bill of lading will and will not be protected from
the adverse claims of third parties.
70. Consider when a shipping term as opposed to contradictory contract language will be most persuasive in identifying
the type of contract. Vice versa?
71. Compare and contrast the circumstances under which a buyer would and would not accept "E"-term contracts.
72. Compare and contrast the risk of loss and expenses associated with "C" and "F" terms.
73. Draft a bill of lading.
74. Draft a contract that includes shipping terms.
75. Prepare an invoice that contemplates any number of the following: ocean freight and insurance costs, ground
transportation costs, port charges, customs fees, forwarder's fees, and communications expenses.
76. What term from Incoterms 2000 would you recommend under each of these scenarios?
A transaction wherein an American seller is to transport the goods by sea from the port of Oakland, California to
Vancouver, Canada and the Canadian buyer's sole obligations are to arrange for import clearance and purchase
insurance against loss from the moment the goods cross the ship's rail.
A transaction wherein a Greek buyer seeks to impose all obligations on the French seller, including export clearance,
the cost of insurance, transportation of the goods by sea from Marseille, France, and import clearance at Piraeus,
Greece, the port of destination.
A transaction wherein a Dutch seller wishes to limit its obligations to notification of the American buyer that the
goods are available for pickup at the seller's warehouse in Antwerp, Netherlands.
A transaction wherein an American seller is to deliver the goods on board a ship in New York and arrange for
export clearance for ultimate shipment to Rio de Janiero with the Brazilian buyer responsible for contracting with the
carrier, the cost of obtaining insurance and obtaining import clearance.
A transaction wherein a Canadian seller is to transport the goods by sea from Halifax, arrange for export clearance,
unload the goods at their final destination in Oslo, Norway and make them available on the wharf while the buyer
arranges for import clearance in Norway.
A transaction wherein a Belgian seller is to deliver the goods to the wharf at the port of Antwerp, provide a receipt
evidencing such delivery and facilitate export clearance with the Swedish buyer responsible for contracting with a
carrier for their transport to Stockholm and bearing all risk of loss from the moment the goods are placed alongside
the ship.
A transaction wherein a Mexican seller is to contract for motor carriage of the goods, deliver the goods to another
motor carrier for transport across the U.S. border, pay unloading and loading costs, arrange for export clearance and
obtain insurance on the U.S. buyer's behalf for final delivery to Phoenix, Arizona.
