TFFE 98th Banking Professional Exam: Case Study

Question 9 (a) An export document was presented to the nominated bank one day after the last date of presentation. The bank was closed on the last date due to riots.

Under UCP 600 Article 36, closure due to riots is treated as a force majeure event. In such a case, the presentation period is not automatically extended.

• I would treat the documents as a discrepant presentation because they were presented after the last presentation date.
• I would inform the beneficiary that the delay cannot be accepted automatically under UCP 600.
• I would seek a waiver from the applicant or the issuing bank before negotiating the documents.
• If the waiver is not received, I would refuse to negotiate the documents.

(b) The exporter requests you to add confirmation to the LC.

Under UCP 600, confirmation can be added only if the issuing bank authorizes or requests it.

• I would inform the exporter that confirmation cannot be added solely at the beneficiary’s request.
• I would wait for authorization or a request from the issuing bank.
• I would assess the credit risk of the issuing bank before deciding to add confirmation.
• If the issuing bank’s request and the bank’s risk assessment are satisfactory, I would add confirmation; otherwise, I would advise the LC without confirmation.

(c) You receive a documentary LC from a foreign bank, but you cannot verify its authenticity.

An advising bank must verify the apparent authenticity of the LC before advising it to the beneficiary.

• I would first try to verify the LC through SWIFT authentication, test key or by contacting the issuing bank.
• If I still cannot verify the authenticity, I would immediately inform the sending bank.
• If I decide to advise the LC, I would clearly inform the beneficiary that its authenticity could not be verified.
• If necessary, I would refuse to advise the LC until its authenticity is confirmed.

(d) An exporter fails to ship the goods within the shipment date and submits the documents after the expiry date of the LC.

The documents contain two discrepancies: late shipment and presentation after the expiry of the LC.

• I would not negotiate or purchase the documents as a complying presentation.
• I would inform the exporter about both discrepancies.
• I would seek a waiver from the applicant or issuing bank, or send the documents on a collection basis if requested.
• If no waiver is received, I would refuse to negotiate the documents under the LC.