True / False
1. The St. Paul Guardian Ins. v. Neuromed Systems case held that international commercial terms were defined
according to the Uniform Commercial Code.
a. True
b. False
2. The “bill of lading” is issued by the seller (exporter) directly to the buyer (importer) in order to claim the goods upon
arrival at the destination port..
a. True
b. False
3. The law governing the negotiability of bills of lading is more fully developed than law governing the negotiability of
commercial paper.
a. True
b. False
4. Bills of lading are a twentieth-century convention of trade practice.
a. True
b. False
5. Bills of lading are negotiable instruments but cannot be used as collateral for an outstanding debt.
a. True
b. False
6. In an international transaction, the seller risk is called “credit risk” and the buyer’s risk is called “delivery risk.”
a. True
b. False
7. Most buyers in an international sale are now willing to pay cash in advance in order to reduce credit risk.
a. True
b. False
8. A seller who quotes on open account terms in a foreign currency bears the currency risk during the open credit
period.
a. True
b. False
9. The documentary letter of credit is a modern commercial practice devised by the United Nations Commission on
International Trade Law.
a. True
b. False
10. Negotiable bill of lading is proof of title allow for the transfer of the title to the goods without requiring the owner to
take possession of the goods.
a. True
b. False
11. The documentary letter of credit transaction serves as a means to assure the buyer and seller that the transaction is
secured.
a. True
b. False
12. Inspection certificates are often used to assure that a shipment will conform to the specifications required by the
buyer.
a. True
b. False
13. In a documentary sales transaction, financial responsibility for lost or damaged goods is always negotiated once the
loss or damage occurs and not before.
a. True
b. False
14. International commercial terms are used in all international contracts for the sale of goods.
a. True
b. False
15. The bill of lading serves as a contract of carriage between the buyer and seller.
a. True
b. False
16. Another term in lieu for a negotiable bill of lading is a documentary draft.
a. True
b. False
17. Negotiable instruments are unconditional promises to pay.
a. True
b. False
18. When a party takes a negotiable document as a good faith purchaser, it generally acquires even greater rights in the
document than the one from whom it had been negotiated.
a. True
b. False
19. Air waybills are governed by the Uniform Commercial Code.
a. True
b. False
20. A clean bill of lading does not guarantee that the goods are without damage even during the voyage to the buyer.
a. True
b. False
21. A straight bill of lading assures that the goods have actually been loaded on board the ship for shipment.
a. True
b. False
22. Under the Uniform Commercial Code, the risk of loss in a destination contract passes to the buyer when the goods
are tendered to the buyer at that place.
a. True
b. False
23. Shipment contracts are more common in international trade than destination contracts.
a. True
b. False
24. Under Incoterms, a sale on terms “DDP” represents the minimum responsibility of the seller and the maximum
responsibility of the buyer.
a. True
b. False
25. According to Incoterms, the risk of loss under contract terms “FAS Name of Vessel” passes to the buyer when the
goods are delivered alongside the named vessel.
a. True
b. False
26. Under an FOB contract, the seller delivery’s the goods on board the ship decks and has no further transportation
obligations.
a. True
b. False
27. The difference between terms “CFR” and “CIF” is that under “CIF” term of sale, the buyer must procure his own
marine insurance coverage on the goods.
a. True
b. False
28. Under contract terms “DES Stockholm,“ the seller must pay the ocean freight to Stockholm, but the buyer pays the
unloading charges at the Stockholm terminal.
a. True
b. False
29. All Incoterms are intended for use with ocean cargo.
a. True
b. False
30. Because negotiable bearer documents are transferred by delivery, they are not used in foreign trade.
a. True
b. False
31. A carrier is entitled to release a shipment covered by a negotiable bill of lading to a holder in possession of a clean
copy of the bill of lading only if the holder also presents a written guarantee of ownership.
a. True
b. False
32. The Incoterms definitions will automatically become a part of a contract for the sale of goods, governed by the UN
Convention for the International Sale of Goods.
a. True
b. False
33. A carrier can be held liable for breach of contract for damages for the misdelivery of goods
a. True
b. False
34. Incoterms are published by the International Chambers of Commerce based in Paris, France.
a. True
b. False
Multiple Choice
35. According to Incoterms, the trade term that represents the maximum responsibility of the seller is:
a. Carriage and Insurance Paid To.
b. Delivered Duty Paid.
c. Ex Works.
d. Delivered at Frontier.
e. None of the above.
36. The trade terms “FOB” and CIF” are defined by which of the following:
a. Incoterms.
b. Uniform Commercial Code
c. The Revised American Foreign Trade Definitions
d. All of the above.
37. According to Incoterms, the risk of loss or damage to goods under a CIF contract passes from seller to buyer when:
a. The goods cross the ship‘s rail at the port of shipment.
b. The goods are unloaded at the port of destination.
c. Title to the goods passes to the seller.
d. The goods leave the seller’s place of business.
38. A sale made with terms “CIF Tokyo” includes in the price quoted for the goods which of the following:
a. Cash, in-transit expenses, foreign exchange expenses.
b. Cash, insurance, freight.
c. Cost, insurance, freight.
d. Currency exchange expenses, insurance, freight.
39. A sale made “CIF foreign port” implies that the terms of the sale are:
a. Credit in foreign currency.
b. Cash against documents.
c. Credit against documents.
d. Settlement pending approval of goods.
40. Because importers and exporters assume different risks, the most preferred way to conduct business and minimize
these risks is:
a. Cash in advance.
b. Open account.
c. Documentary sale.
d. All of the above.
41. The purpose of the bill of lading is to:
a. Transfer title of the goods to the freight forwarder.
b. Prevent shipping delays.
c. Enable the seller to transfer title of the goods to the buyer and receive payment.
d. None of the above.
42. In addition to the bill of lading, other documents that may be required for shipment include all but which of the
following:
a. Inspection certificate.
b. Consular invoice.
c. Commercial invoice.
d. All of the above.
43. In the U.S., the use of bills of lading is governed by:
a. Federal Bills of Lading Act.
b. The Convention on Contracts for the International Sale of Goods.
c. Incoterms.
d. None of the above.
44. The title of the goods sold in a documentary sale is transferred through:
a. Negotiation of the document only.
b. Delivery of the goods only.
c. Negotiation of the document and delivery of the goods.
d. Title to the goods is not transferred in a documentary sale.