University of Education

Lower Mall Campus

Lahore

INTERNATIONAL TRADE AND MBA Fall (2017-19) Time Allowed: 1 Hour

DOCUMENTARY CREDITS Final Term Exam

CASE STUDY
DATED: 20-06-2019
LADIES AND GENTLEMEN:

BY THE ORDER OF:

M/S. Bashir Sons Pvt. Ltd.
52 Mall Road, Lahore

1. We hereby establish in your favor this irrevocable letter of credit (from here onwards called
“credit”) for the account of THREE STAR PHARMACY, FINANCIAL DISTRICT NY, USA, in the amount
of $ 300,000/- (US Dollar three hundred thousands only), effective immediately and available to
you on Sight, upon complying presentation by you at the counter of STANDARD CHARTERED BANK
FINANCIAL DISTRICT BRANCH NEW YORK USA And expiring on 31-10-2019 unless terminated
earlier in accordance with the provisions hereof or otherwise extended.

2. This credit is issued at the request of the applicant, and we hereby irrevocably authorize you to
honor or negotiate the Credit upon a complying presentation, by debiting NOSTRO Account
[Account No.]
3. The shipment must be made in an independent container sealed by the courier and inspected by
a custom official, insured by [American Insurance International]. The shipment must be made
before end of July from New York port of US to Gawadar Port, Pakistan and presentation must be
made within 15 days from the date of shipment

4. All bank charges including but not limited to, fee or commission, shall be on applicant’s account

5. This credit shall automatically terminate and be delivered to us for the cancellation on the earliest
of (i) the payment made by you on our account and reimbursed by us accordingly, (ii) the above
stated expiry date hereof.

6. This credit is non tranferable, and except as other wise expressly stated herein, this credit is
subject to the uniform customs and practice for documentary credits (revision 2007),
international chamber of commerce publication 600.

7. We hereby agree with you that this letter of credit will be duly honored upon presentation to
TRADE DEPARTMENT NILA GUNBAD BRANCH LAHORE MCB BANK LTD. PAKISTAN on or before the
expiry date.

Questions
Subject to Rules and Regulation of UCP-600 and requirements of above L/C

1 Identify all the parties and issuing authorities as specified in the credit? (6)
2 Determine the latest date of shipment and latest date of presentation? (4)
3 What is the mode of settlement for this Credit? (2)
4 Applicant requests an ammendment (I) to change the port of destination from Gawadar port
Pakistan to Bin Qasim Port Karachi, Pakistan; and (II) to extend the last date of shipment to
middle of August. The beneficiary does not give an acceptance or rejection upon receipt of (4)
Ammendment. How the bank(s) should proceed?
5 Determine latest date of shipment and latest date of presentation according to above stated
ammendment? (4)

6 Issuing Bank while issuing ammendment specifies that the ammendment should be rejected
within 5 days of advice of ammendment or it would be cosidered as accepted. If ammendment (4)
is advised on 03-07-2018, what is the last date to reject the ammendment?