INTERNATIONAL BUSINESS LAW AND ITS ENVIRONMENT 9TH EDITION SCHAFFER TEST BANK
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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
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Knowledge
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
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
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
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Application
4. Bills of lading are a twentieth-century convention of trade practice.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Knowledge
5. Bills of lading are negotiable instruments but cannot be used as collateral for an outstanding debt.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
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
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Comprehension
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
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Knowledge
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
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
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
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Application
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
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Term of Trade
KEYWORDS: Bloom's:Application
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
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
12. Inspection certificates are often used to assure that a shipment will conform to the specifications required by the buyer.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
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
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
14. International commercial terms are used in all international contracts for the sale of goods.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Knowledge
15. The bill of lading serves as a contract of carriage between the buyer and seller.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
16. Another term in lieu for a negotiable bill of lading is a documentary draft.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Knowledge
17. Negotiable instruments are unconditional promises to pay.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Knowledge
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
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
19. Air waybills are governed by the Uniform Commercial Code.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
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
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Application
21. A straight bill of lading assures that the goods have actually been loaded on board the ship for shipment.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Application
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
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
23. Shipment contracts are more common in international trade than destination contracts.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Knowledge
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
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
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
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Comprehension
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
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Application
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
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Evaluation
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
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom"s: Comprehension
29. All Incoterms are intended for use with ocean cargo.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Comprehension
30. Because negotiable bearer documents are transferred by delivery, they are not used in foreign trade.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Comprehension
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
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
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
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Comprehension
33. A carrier can be held liable for breach of contract for damages for the misdelivery of goods
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Application
34. Incoterms are published by the International Chambers of Commerce based in Paris, France.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Knowledge
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.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
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.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentaray Sale and Terms of Trade
KEYWORDS: Bloom's: Comprehension
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.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Comprehension
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.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
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.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Comprehension
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.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
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.
ANSWER: c
POINTS:
DIFFICULTY: NATIONAL
STANDARDS: STATE
STANDARDS: TOPICS:
KEYWORDS:
1
Moderate
United States - BUSPROG - Reflective Thinking
United States - AICPA - AICPA - BB-Legal
The Documentary Sale and Terms of Trade
Bloom's: Application
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.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Comprehension
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.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Knowledge
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.
ANSWER:
POINTS:
DIFFICULTY:
NATIONAL STANDARDS:
STATE STANDARDS:
TOPICS:
KEYWORDS:
a 1 Moderate
United States - BUSPROG - Reflective Thinking
United States - AICPA - AICPA - BB-Legal
The Documentary Sale and Terms of Trade
Bloom's: Application
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.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Knowledge
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.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Comprehension
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.
ANSWER:
POINTS:
DIFFICULTY:
NATIONAL STANDARDS: STATE
STANDARDS: TOPICS:
KEYWORDS:
a 1
Moderate
United States - BUSPROG - Reflective Thinking
United States - AICPA - AICPA - BB-Legal
The Documentary Sale and Terms of Trade
Bloom's: Knowledge
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.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Knowledge
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.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Comprehension
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.
ANSWER:
POINTS:
DIFFICULTY:
NATIONAL STANDARDS: STATE STANDARDS: TOPICS:
KEYWORDS:
a 1
Easy
United States - BUSPROG - Reflective Thinking
United States - AICPA - AICPA - BB-Legal
The Documentary Sale and Terms of Trade
Bloom's: Application
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.
ANSWER: b
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Analysis
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.
ANSWER: c
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Analysis
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.
ANSWER: b
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Analysis
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.
ANSWER: a
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
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.
ANSWER: c
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Synthesis
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.
ANSWER: c
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Comprehension
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.
ANSWER: b
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Analysis
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.
ANSWER: d
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Analysis
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.
ANSWER: c
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Salae and Terms of Trade
KEYWORDS: Bloom's: Analysis
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.
ANSWER: d
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Analysis
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.
ANSWER: c
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Docmentary Sale and Terms of Trade
KEYWORDS: Bloom's: Analysis
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.
ANSWER: c
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Analysis
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.
ANSWER: a
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Analysis
64. Under which International Commercial Term is the lowest quoted price per unit.
a. FOB
b. CNF
c. EX:Works
d. DAS
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Application
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
ANSWER: a
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Synthesis
66. When goods are to be transported by more than one mode of transportation.
a. unimodal
b. FAS
c. DAS
d. multimodal
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Application
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.
ANSWER: a
POINTS: 1
DIFFICULTY: challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: Documentary Sale and Terms of Trade
KEYWORDS: Bloom's:Synthesis
Subjective Short Answer
68. What are the benefits and possible detriments of using an inspection firm?
ANSWER: Answer not provided.
POINTS: 1
DIFFICULTY: Challenging
LEARNING OBJECTIVES: IBLE.SADE.12.1 - Comparative Analytical Questions
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Evaluation
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.
ANSWER: Answer not provided.
POINTS: 1
DIFFICULTY: Challenging
LEARNING OBJECTIVES: IBLE.SADE.12.1 - Comparative Analytical Questions
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Evaluation
70. Consider when a shipping term as opposed to contradictory contract language will be most persuasive in identifying the type of contract Vice versa?
ANSWER: Answer not provided.
POINTS: 1
DIFFICULTY: Challenging
LEARNING OBJECTIVES: IBLE.SADE.12.1 - Comparative Analytical Questions
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Comprehension
71. Compare and contrast the circumstances under which a buyer would and would not accept "E"-term contracts.
ANSWER: Answer not provided.
POINTS: 1
DIFFICULTY: Challenging
LEARNING OBJECTIVES: IBLE.SADE.12.1 - Comparative Analytical Questions
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Evaluation
72. Compare and contrast the risk of loss and expenses associated with "C" and "F" terms.
ANSWER: Answer not provided.
POINTS: 1
DIFFICULTY: Challenging
LEARNING OBJECTIVES: IBLE.SADE.12.1 - Comparative Analytical Questions
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Evaluation
73. Draft a bill of lading.
ANSWER: Answer not provided.
POINTS: 1
DIFFICULTY: Challenging
LEARNING OBJECTIVES: IBLE.SADE.12.2 - Essay/Writing Assignments
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
74. Draft a contract that includes shipping terms.
ANSWER: Answer not provided.
POINTS: 1
DIFFICULTY: Challenging
LEARNING OBJECTIVES: IBLE.SADE.12.2 - Essay/Writing Assignments
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
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.
ANSWER: Answer not provided.
POINTS: 1
DIFFICULTY: Challenging
LEARNING OBJECTIVES: IBLE.SADE.12.2 - Essay/Writing Assignments
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Application
Essay
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.
ANSWER: CFR. The C Group of Incoterms 2000 signifies that the seller must bear certain costs even after risk of loss or damage to the goods has passed to the buyer. CFR (cost and freight) requires the seller to contract for carriage, deliver the goods on board, provide a clean transport document (such as a bill of lading), arrange for export clearance and pay the unloading costs for seller's account under the contract of carriage. Liability for costs transfers at the port of destination. The risk of loss transfers to the buyer when the goods pass the ship's rail at the port of shipment. The buyer's duties are to accept delivery from the seller, receive the goods from the carrier and remit such costs as are not for the seller's account pursuant to the contract for carriage. CFR may only be used for transport by sea or inland waterway.
DDP The D Group of Incoterms 2000 requires that the goods arrive at a stated destination DDP (delivered duty paid) represents the seller's maximum obligation The seller must deliver the goods at the named destination and arrange for import and export clearances Risk and cost transfer from the seller to the buyer when the goods are made available to the buyer at the destination The buyer's sole duty is to take delivery of the goods from the seller at the named place of destination DDP may be used for any mode of transportation.
Ex Works The sole E term represents the seller's minimum obligation The seller must notify the buyer that the goods are available at the seller's factory, warehouse, or office. The seller is not responsible for loading the goods on the vehicles provided by the buyer or for clearing the goods for export. The buyer bears all the costs and risks of transport from the seller's place of business to the point of destination. As such, Ex Works should only be used by experienced importers.
FOB. The F Group of Incoterms 2000 signifies that the seller must hand over the goods to a designated carrier free of risk and expense to the buyer. FOB (free on board) requires the seller to deliver conforming goods on board the vessel named by the buyer at the stipulated time, give notice to the buyer of the delivery and arrange for export clearance The seller bears all costs up to the passing of the ship's rail at the port of shipment, including exportation fees, the packing and checking of the goods, and the costs of obtaining a document evidencing the loading of the goods. The buyer bears all risks upon the goods' passage of the ship's rail The buyer's primary duty is to designate and contract with a carrier to transport the goods to their final destination.
DEQ The D Group of Incoterms 2000 requires that the goods arrive at a stated destination DEQ (delivered ex quay) obligates the seller to bear the costs and risks of
shipment to the port of destination. The seller's responsibilities end when the goods are unloaded and made available to the buyer at the wharf. Risk and cost transfer from the seller only upon the placement of the goods at the buyer's disposal on the wharf The seller must also provide a document enabling the buyer to take delivery and arrange export clearance. DEQ may only be used for water transport.
FAS. The F Group of Incoterms 2000 signifies that the seller must hand over the goods to a designated carrier free of risk and expense to the buyer. FAS (free alongside ship) requires the seller to deliver the goods alongside the ship, provide a receipt evidencing such delivery and facilitate export clearance. The buyer bears all costs and risks from the moment the goods are placed alongside the vessel. The buyer must designate and contract with a carrier for transport of the goods to their final destination. FAS only applies to sea and inland waterway transport.
CIP The C Group of Incoterms 2000 signifies that the seller must bear certain costs even after risk of loss or damage to the goods has passed to the buyer CIP (carriage and insurance paid to) requires the seller to contract for carriage, deliver the goods to the first carrier, pay loading and unloading costs, arrange for export clearance, obtain insurance and provide buyer with a certificate or policy evidencing such insurance The buyer must accept delivery of the goods from the seller, receive the goods from the carrier and pay such costs as are not for the seller's account under the contract for carriage. Risk transfers to the buyer when the goods are delivered to the initial carrier. CIP may be used for any form of transportation.
POINTS: 1
DIFFICULTY: Challenging
NATIONAL STANDARDS: United States - BUSPROG - Reflective Thinking
STATE STANDARDS: United States - AICPA - AICPA - BB-Legal
TOPICS: The Documentary Sale and Terms of Trade
KEYWORDS: Bloom's: Analysis