Note: Read the paragraph and tick the right answer as given below :

1) An 2010, Oil Parts Inc., an Australian company specializing in oil machinery parts, sign a contract with a Libyan oil and gas company to supply replacement parts for equipment used in oil fields. The Australian company asked the payment to be made via an irrevocable letter of credit issued by an accredited bank in the country. The buyer's bank was the Libyan Arab Foreign Bank, which was unacceptable to the exporter as per company guidelines. As such, the Australian company requested the payment be made using a confirmed letter of credit and at the cost of confirmation will be assumed and by the issuing company - the Libyan oil and gas company. As the contract was in process, Libya faced political turmoil due to civil war during the Arab Spring. The Libyan Arab Foreign Bank's rating was degraded, and the bank remained closed for months. The Australian company had just made its last shipment when the war broke out, the buyer accepted the goods. Do you think the Australian Company will receive the payment in this case?*

A) The Australian Company will receive the money directly from Libyan Arab Foreign Bank.

B) The Australian Company will not receive the payment until the Libyan Arab Foreign Bank makes payment to the Confirming Bank.

C)The Australian Company will have to wait till the war is over and collect the money directly from the Libyan oil and gas company

D)The Australian Company will receive the money directly from the Confirming Bank, although the Confirming Bank cannot collect the funds from Libyan Arab Foreign Bank until the war is over.

2) As the accredited may have to pay for the goods before shipment, please grant him advances (an advanced payment) for the purpose of making such payments against warehouse receipts or other documents evidencing the right to claim the position of the goods and the undertaking to deliver the related bills of lading in due course. Search warehouse receipts or other documents may be entrusted do the accredited in exchange for his acknowledgment that the documents are held by him as trustee for you and as your agent to obtain for you in exchange for the relative bill of lading. The goods, whilst in the warehouse pending shipment, are to be insured by ABC insurance. We accept responsibility for the repayment of anticipatory advances Granted by you within the credit limits. What type of letter of credit is being issued here?*

A) Prepayment Letter of Credit

B) Red Clause Letter of Credit

C) Transferable Letter of Credit

D) Irrevocable Letter of Credit

3) Although this type of letter of credit provides many advantages, especially for an exporter or first beneficiary who does not have sufficient credit to have a bank open a letter of credit directly to the ultimate supplier, and who must rely on the willingness of the importer to authorize a transfer, it also has a few disadvantages. This type of letter of credit may be disadvantages for the original or first beneficiary, as the importer could ultimately become aware of the ultimate supplier or producer and might choose to deal with them directly in subsequent transactions. Additionally, if documents presented by the supplier are not compliant with this letter of credit, they will most often be non-compliant with the master letter of credit, and therefore expose the exporter or first beneficiary to the risk of refusal of documents due to the discrepancy. What type of letter of credit is being discussed here?*

A) Red Clause Letter of Credit

B) Transferable Letter of Credit

C) Irrevocable Letter of Credit

D) Prepayment Letter of Credit