QUESTION 1

Read carefully the caselet below and answer the questions that follow.

Panfabric Sdn Bhd (Panfabric), a sports apparel manufacturing company operating in Prai, Malaysia has been appointed by Sportsfactory Italia S.p.a. (Sportsfactory), an international distributor of branded sports apparel based in Milan, Italy to be one of its suppliers for the Asia-Pacific markets. Under the agreement between them, Panfabric is to direct all billings to Sportfactory in Milan for all the supplies sent to selected outfits in the Asia-Pacific countries. Both Sportsfactory and Panfabric agree that transactions between them shall be settled via confirmed sight letters of credit accompanied with a bill of exchange. Confirmation of the letter of credit is usually done by the issuing banks correspondent agent in the country of the seller. The main banker for Sportsfactory is Banco Italiano in Milan while for Panfabric, the main banker is a branch of Maybank in Butterworth. Banco Italianos main correspondent agent in Malaysia is RHB Bank Kuala Lumpur while Maybanks main correspondent agent in Italy is Banco de Roma in Rome.It was also agreed between Sportsfactory and Panfabric that in order to facilitate speedy settlement of the trade bills, the beneficiary may claim reimbursment from the issuing banks correspondent agent in the country of the seller.

A. Under UCP 600, there are a number of major parties in documentary credit process, such as the applicant, issuing bank, advising bank, confirming bank, beneficiary, drawer, drawee, nominated bank, payee and reimbursing bank. You are required to identified parties involved as mention before.

B. Apart from its contract with Sportsfactory in Milan and with an annual turnover of MYR 275.0 million, the main business cycle of Panfabric in Prai consists of purchases of multi textured fabrics from Thai and Hong Kong suppliers on cash terms. The company also purchases unique gift boxes and wrappers for its finished products from two prominent local suppliers whose payments are on 60-days credit terms. On several occasions, the company exports part of its finished products to retailers in Singapore and the Philippines on documents against acceptance (D/A) terms.

C. With regards to the above case, identify FIVE (5) different capacities that your bank can possibly assume as prescribed under either UCP 600 and/or URC522. For each capacity, briefly describe the role to be played by your bank.

THIS SUBJECT IS INTERNATIONAL TRADE AND FINANCE

I HAVE LESS THAN ONE HOUR PLEASE GIVE ANSWER ASAP