takes effect only when the e___________ is made.
8. D ____________ draft is the one that can be honored only when certain other documents have been
attached to
9. P__________ means the holder of the draft presents the draft to the drawee (or payer) asking the latter either
to pay or to accept the bill.
10. An effective e_____________ must be on the back of the draft itself and consists of a signature, or plus the
name of the endorsee and related comments by the owner of the draft
11. When a draft is duly presented for acceptance or payment but the acceptance or payment is refused, the draft
is said to be d_____________.
12. T_________ means the transfer made by telecommunication system such as telex or telegraph. It is faster
than M/T, but more expensive.
13. A _________ bank is the bank located in the exporter’s country who informs the exporter that a letter of
credit has been opened in his favor and transfers the L/C to the exporter. It is usually the correspondent of the issuing banking.
14. An i____________ L/C is the one that cannot be modified or rescinded by the opening bank without express
permission of all parties, including the exporter, importer, and intermediary banks.
15. The T (U) ____________ L/C implies that the seller is paid in a specified number of days after the
presentation of the stipulated documents.
16. The buyer will purchase regularly from a foreign supplier. Then the r_________ L/C may be used.
17. Documentary c___________ is a method by which the exporter authorizes the bank to collect money from
the importer.
18. D____________ means that the title documents will be handed over to the buyer once the buyer has
accepted the usance draft drawn by the seller.
19. C________ sales are between an exporter and an importer whereby the importer does not become outright
owner of the goods.
20. B_________ evidences that the goods have been received on board the carrier and that the shipper is under
the contract to carry out the transportation agreement.
VI. Fill in each of the following blanks with an appropriate word. (15’)
purchase inspected so to otherwise negotiating upon rule under out
Since there is, as a __1_____, an inspection clause in a business contract, the exporter is ___2___ obligation to observe the contract stipulation and carry ___3_____ inspection of the export goods as required; _____4______ he cannot get payment form the negotiation bank.
Careful and proper inspection is indispensable__5______ ensure the quality of the goods that the buyer wants to ____6____ both at home and especially form a foreign supplier. It is the accepted practice of the exporter to have the goods __7______before shipment, ___8____ that the seller can obtain the certificate of quality, quantity or weight and, thereby, _____9___ with the bank for payment __10______ presentation of the shipping documents, of which such certificates are the component part. VII. Answer the Following Questions. (10’)
1. What are the same points and differences between CFR and CIF?
2. Why is documentary L/C commonly used as a term of payment in international trade?