in 1981, Mr Singh started arranging to open a branch of the family business Fabrics Ltd (an international company manufacturing textiles) in Cape Town, South Africa. In 1983 Mr and Mrs Singh relocated to Cape Town and established a domicile there. Mr Singh took up the position as branch manager of the Cape Town branch of Fabrics Ltd

2.2 Mr Singh approaches you as expert in international trade law matters for advice on the following:

2.2.1 Fabrics Ltd (the South African branch) needs to purchase fabric dye in large quantities from a supplier in China. Mr Singh has no knowledge of relevant carriers to approach or of insurers to insure the goods while in transit. Would you advise Mr Singh to conclude the contract under the FOB or CIF Incoterm? Motivate your answer fully.

2.2.2 The Chinese supplier insists that payment be made via a confirmed letter of credit. Explain to Mr Singh how a confirmed letter of credit works.