Certificate for Specialists in Demand Guarantees

(CSDG®)
Session code: Model Test-03/2019
Date: April 06, 2019
Length of examination: 3 hours
_____________________________________________________________________
Instructions to candidates
1. Open this question paper and the supporting documentation when instructed to do so.
2. Answer all questions.
3. Use the examination answer sheets provided for your answers. Please do not note your answers
in this booklet or on the supporting documentation, as they will not be recorded.
4. Read the instructions on the answer sheet carefully.
5. Hand in all the examination materials before you leave the examination, including the answer
sheet, the question paper, case study and simulation booklets, and have them checked by the
invigilator. Failure to do so will invalidate your entry.

Information for candidates

1. This paper consists of two sections:
-choice questions worth one mark each.
-alone analysis questions worth one mark each; a case study with 2
worth two marks each; and 6
simulation exercises worth a maximum of five marks each.
2. Accompanying this question paper are two booklets, one containing case study documents and
one containing the six simulation exercises.
3. In the questions in both Section A and Section B you should assume that, unless otherwise
stated, there are no national holidays, Saturdays and Sundays are not banking days, and all
transactions take place in the same year.
4. Silent non-programmable (including scientific) calculators are allowed. Programmable
calculators are not allowed.
1. Bank F issues a URDG 758 tender guarantee on behalf of Company H. Company H is
unsuccessful in its tender and asks Bank F to cancel the guarantee. Company H provides a copy of
the notification of the unsuccessful tender from the beneficiary to support its request. The guarantee
does not state any specific requirements for cancellation of the guarantee. Which of the following is
the best course of action for Bank F?
A Cancel the guarantee immediately and advise the beneficiary.
B Issue confirmation of cancellation only on expiry of the guarantee.
C Request the beneficiary to provide authenticated release of liability and cancel on
receipt.
D Wait for confirmation from the beneficiary.

2. A demand guarantee is, by its nature, independent from the:

A application only.
B letter of credit associated with the underlying relationship only.
C underlying relationship only.
D underlying relationship, the application, any letter of credit and any counter-guarantee.
3. Bank A issues a guarantee covering a supplier‟s commitment to deliver equipment in good
working order and that will not require repair within the first 12 months. What type of guarantee is
this?
A Performance.
B Reinsurance.
C Retention money.
D Warranty.
4. The term „accessory guarantee‟ is associated with which of the following?
A Demand guarantees.
B Indemnities.
C Standby letters of credit.
D Suretyship guarantees.
5. Which of the following statements about a URDG 758 counter-guarantee are false?
1. The wording in the demand must mirror exactly the wording of the demand under the
related guarantee.
2. It must be irrevocable.
3. It will always expire 10 business days after the expiry of the related guarantee.
A 2 only.
B 3 only.
C 1 and 2 only.
D 1 and 3 only.

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6. According to URDG 758, which of the following statements is true about counter-guarantees
issued after 1 July 2010?
A If a counter-guarantee is issued stating only that it is subject to „URDG‟ then it will
automatically be subject to URDG 458.
B If the counter-guarantee is expressly subject to URDG 758, the related demand guarantee
must also be subject to URDG 758.
C If the counter-guarantor requests the guarantor to issue a URDG 758 guarantee, then unless
the counter-guarantee states otherwise, the counter-guarantee is also subject to URDG 758.
D The maximum amount payable under a counter-guarantee will always be 10% more than the
amount payable under the related demand guarantee.

7. Bank T issued a URDG 758 guarantee. It states: „This guarantee is valid until completion of the
contract.‟ Which of the following best describes when the guarantee expires?
A One year from the date it was issued.
B Three years from the date it was issued.
C When the contract has been completed.
D When the guarantor has been informed by the instructing party that the contract has been
completed.

8. Bank M issued a URDG 758 guarantee, payable against a simple demand indicating that the
applicant has not built a tower in accordance with contracted specifications and dated within six
months of the contract dated 15 January 2014.
Upon presentation, the demand reads: „Applicant, namely XX Co, has not built the tower using red
bricks and is in default of the contract‟, and it is dated 22 July 2014. As the statement was not a
match the guarantor refused the demand for that reason alone
Which of the following statements is true? The:
A demand was compliant and should have been paid.
B guarantor can retrospectively advise the beneficiary that the demand was past its allowable
drawing date.
C guarantor cited all discrepancies within the claim.
D guarantor failed to indicate that the guarantee was past its allowable drawing date.

9. According to international standard guarantee practice, and unless otherwise stated in the
guarantee, presentation should be made at the place of:
A the guarantor.
B performance of the underlying relationship.
C the instructing party‟s residence.
D the beneficiary‟s business.

10. A guarantee subject to URDG 758 provides that presentation must be made by „DHL‟. The
beneficiary sends a complying demand by ordinary post, which arrives before expiry. This
presentation:
A is complying as long as the guarantee does not expressly prohibit delivery by ordinary post.
B is not complying because it was sent by another mode of delivery.
C is only complying if delivery by ordinary post is expressly permitted under the guarantee.
D is only complying if the instructing party expressly accepts.

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11. Unless the guarantee expressly states otherwise, a demand under a URDG 758 guarantee must
be accompanied by:
A all documents specified in the guarantee and a supporting statement indicating in what respect
the applicant is in breach.
B all documents specified in the guarantee and an original notice signed by the beneficiary.
C proof of breach by the beneficiary.
D the underlying relationship agreement and the demand.

12. Bank P issues a URDG 758 performance guarantee in English. To make a complying demand,
the beneficiary must present a report from an independent assessor, XYZ Partners.
The beneficiary subsequently makes a demand under the guarantee. The statement by the
beneficiary is in English and is in accordance with the terms of the guarantee. The report by XYZ
Partners is in French. What is the correct course of action to be taken by Bank P?
A Accept the demand as complying and pay the beneficiary.
B Forward the assessor‟s report to the instructing party and request their agreement to pay.
C Forward the assessor‟s report to Bank P‟s approved translation service.
D Return the assessor‟s report, stating that the demand will be paid in full on receipt of the report in
English.

13. According to URDG 758, „guarantor‟s own records‟ means:

A all records available in the issuing branch.
B all records of the bank.
C all records that are available in the Guarantees Department.
D the records of the guarantor showing amounts credited or debited from accounts held with the
guarantor.

14. When the guarantor decides that a demand under a guarantee issued subject to URDG 758 is
complying, it must:
1. transmit a copy of the complying demand and of any related documents to the instructing party.
2. inform the beneficiary.
3. pay the demand.
A 1 only.
B 2 only.
C 1 and 3 only.
D 2 and 3 only.

15. Bank J is requested to issue a guarantee or standby which states that „the guarantor will
examine the beneficiary‟s claim to ensure that the applicant has failed in its contracted duty‟.
Which of the following types of undertaking is the most appropriate?
A A guarantee or standby letter of credit subject to URDG 758.
B A UCP 600 standby letter of credit.
C An accessory guarantee not subject to any ICC rules.
D An ISP98 standby letter of credit.

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16. Under a URDG 758 guarantee which of the following statements are incorrect?
1. A demand is non-complying if any supporting documentation indicates an amount owed that is
more than the amount demanded.
2. A demand must be accompanied by a statement indicating the nature of the breach in the
underlying relationship.
3. Presentation by the beneficiary of a non-complying demand precludes the beneficiary from
presenting a new demand.
4. A demand may not be made for less than the full amount available under a guarantee.
A 1 and 4 only.
B 1, 2 and 4 only.
C 1, 3 and 4 only.
D 2, 3 and 4 only.

17. Bank G issues a transferable guarantee subject to URDG 758 in favour of Company S.
Company S asks Bank G to transfer the guarantee to Company B and provides a signed statement
confirming that Company B has acquired Company S‟s rights and obligations in the underlying
relationship. Bank G agrees to the transfer. After the transfer, Company S wants to make a demand
for breaches that happened before the transfer. Which of the following is correct?
A Both the transferor and transferee are allowed to claim for damages.
B Company B should claim breaches but it must attach the supporting statement signed by
Company S (the transferor).
C Company S has no right to demand payment after the transfer. Demands and supporting
statements must be issued by Company B.
D Company S is able to claim for breaches before the transfer.

18. A guarantor issues a URDG 758 payment guarantee containing a merchandise description for
gasoline and stating that the unit price may adjust based upon the average commodity price quoted
on the website of a specified exchange between specified dates. Once a presentation is received,
the guarantor should:
A accept the demand stating only „gasoline‟ and accepting any unit price quoted in the demand.
B ensure the unit price complies with the website pricing for the specified dates performing the
necessary calculations.
C ensure the required demand quotes the merchandise description in full only.
D ensure the unit price complies with the website pricing for the specified dates without
performing any calculations.

19. Bank B issues an amendment to a warranty guarantee subject to URDG 758 that reduces the
maximum guarantee amount. Which of the following statements is correct?
A Acceptance of the amendment may be assumed if rejection has not been received within five
working days.
B The amendment will only become effective at the end of the warranty period.
C The maximum amount that the beneficiary may demand under the guarantee will be reduced
immediately.
D The reduction in the amount of the guarantee will become effective only on acceptance of the
amendment by the beneficiary.

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20. A guarantee subject to URDG 758 is issued when:
A it is handed to the postal service.
B it leaves the control of the guarantor.
C the beneficiary acknowledges its receipt.
D the beneficiary receives it.

21. Which of the following statements relating to guarantees and standby letters of credit is true?
A A guarantee and a standby letter of credit fulfil the same purpose.
B A guarantee can only be used to support an applicant's obligations to perform under a
contract.
C A guarantee provides better financial security for the beneficiary than a standby letter of
credit.
D A standby letter of credit can only be used to support an applicant‟s obligations to perform
under a contract.

22. An amendment to a guarantee is issued three days after the guarantee has expired, and the
beneficiary accepts the amendment. Which of the following cannot be true?
A The amendment notice could reinstate the guarantee.
B The extension may only take effect if the instructing party subsequently approves it.
C The guarantee could take effect as a new guarantee.
D The guarantee may be extended.

23. Bank N receives an MT999 request from Bank A to advise a URDG 758 guarantee. Which of
the following actions must Bank N not take?
1. Tell the beneficiary that it has rejected a request from Bank A to advise the guarantee and
provide Bank A‟s contact details.
2. Advise the beneficiary of the guarantee without commenting on its authenticity.
3. Inform Bank A, without delay, that it will not be advising the guarantee.
A 1 only.
B 3 only.
C 1 and 2 only.
D 1 and 3 only.

24. When an amendment is issued by the guarantor, the beneficiary:

A has to accept it.
B must discuss it with the instructing party.
C must notify any rejection within five working days.
D will not be bound by it unless the beneficiary expressly accepts the amendment.

25. Under URDG 758, an advising party is expected to:

A advise a guarantee at the request of the guarantor.
B deal directly with the instructing party.
C pay any complying demand.
D issue an amendment on the instruction of the beneficiary only.

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26. Bank H issues an amendment to a performance guarantee subject to URDG 758, in favour of a
South African beneficiary increasing the amount by ZAR75,000. Which of the following
statements is correct?
A Bank H is irrevocably bound by the amendment from the time it leaves the guarantor‟s control.
B Demands from the beneficiary for the increased amount will be rejected unless the
amendment has been accepted beforehand.
C The instructing party will only be liable if the beneficiary claims for the increased amount.
D The beneficiary will only be bound if it accepts the amendment.

27. Under URDG 758, an advising bank, unless it notifies the beneficiary to the contrary, is
responsible for:
A examining documents and effecting payment against a complying demand.
B informing the beneficiary that the guarantee has been issued only.
C satisfying itself of the apparent authenticity of the guarantee only.
D satisfying itself of the apparent authenticity of the guarantee and that the advice accurately
reflects the terms and conditions of the guarantee as received.

28. The examination of a presentation under a guarantee must be made by the:

A advising party.
B guarantor on the basis of a presentation alone.
C guarantor with cooperation from the instructing party.
D guarantor, having regard to the terms of the underlying relationship.

29. A standby letter of credit issued subject to ISP98 rules does not indicate whether a presentation
is to be made in electronic or paper format. Which of the following statements is correct?
A An electronic presentation can be considered a paper presentation if it is printed by the issuer.
B The issuer can refuse electronic presentation in all circumstances.
C The issuer cannot refuse presentation by electronic means if presentation only requires a demand.
D Where there is no indication of medium in the standby, a presentation must be in paper form in
all circumstances.

30. If a counter-guarantee is subject to URDG 758 and remains silent about the applicable law /
rules of the guarantee, the:
A guarantor can choose whether to issue the related guarantee subject to URDG 758.
B related guarantee cannot be issued subject to URDG 758.
C related guarantee must be issued subject to URDG 758.
D related guarantee must be issued stating it is subject to URDG 758 and the governing law of the
beneficiary.

31. A buyer of goods wants to be sure that it will receive compensation if the goods do not meet the
requirements of the sales contract. The buyer requests that a guarantee is issued in its favour.
Which of the following would best suit this situation?
A Advance payment guarantee.
B Credit enhancement guarantee.
C Customs bond.
D Performance guarantee.

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32. For a guarantee issued under URDG 758, which of the following is true if an event of force
majeure occurs in the place of presentation before expiry and continues post-expiry?
A The guarantee must be extended for a period of 30 days from the initial expiry date.
B The guarantor can disregard the rules about force majeure because the guarantee was issued
before the force majeure event.
C The guarantor can terminate the guarantee even if a presentation has been made but not
honoured.
D The guarantor must seek the instructing party‟s approval to allow another reasonable place for
presentation.

33. For a URDG 758 guarantee, which of the following statements is correct?
A A beneficiary is required to accept a guarantee issued by any party of the instructing party‟s
choosing.
B A guarantor cannot issue a guarantee when acting for its own account.
C A guarantor cannot issue a suretyship guarantee subject to URDG 758.
D Only an insurance company can issue a demand guarantee.
34. An instructing party asks its bank to issue a guarantee subject to URDG 758; however, the bank
decides not to issue the guarantee due to imposed sanctions. Within what time limit must the bank
inform the instructing party?
A Without delay following the bank‟s decision not to issue.
B Within 3 business days following the bank‟s decision not to issue.
C Within 5 business days following the bank‟s decision not to issue.
D Within 30 calendar days following the bank‟s decision not to issue.

35. Bank S has issued a URDG guarantee under which a demand is received and deemed
complying. However, before it can be paid, Bank S hires a new president and decides to declare a
bank holiday for the next two days to celebrate. During that time the guarantee expires. According
to URDG 758, what must Bank S do upon return to business?
A Reject the demand as payment would be made after expiry of the guarantee.
B Nothing as the closure is classed as a force majeure event and therefore the guarantee is
automatically cancelled.
C Pay the demand as this event did not qualify for a force majeure event.
D Pay the demand only after 30 days have elapsed from its resumption of business.

36. A complying demand under a URDG 758 guarantee denominated in USD is presented. At the
time of presentation, payment in USD is illegal at the place for payment. The guarantor pays in the
currency of the place for payment instead of in USD. In what currency must the counter-guarantor
reimburse the guarantor?
A Any freely convertible currency the guarantor selects and notifies to the counter-guarantor.
B Either the currency in which payment has been effected or USD, whichever the guarantor selects.
C The currency of the place for payment only.
D USD only.

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37. A guarantor in country Y issues a demand guarantee subject to URDG 758 to a beneficiary in
country X. Due to political reasons country Y enacts laws preventing any payments to country X.
While the law in country Y is in effect, the guarantor receives a complying presentation from the
beneficiary in country X. The guarantor should:
A find the presentation discrepant and notify the beneficiary.
B observe the guarantor‟s local law while it is in effect.
C immediately pay the complying presentation.
D refuse the complying presentation.

38. An independent guarantee must not contain which of the following?

A A condition regarding transfer.
B A condition that requires the guarantor to examine the terms of the underlying relationship.
C A statement that it is revocable.
D Reference to the goods or services to be provided in the underlying relationship.

39. A guarantee issued subject to URDG 758 states that it is payable upon receipt of the
beneficiary‟s demand for payment. The guarantor receives a demand for payment from the
beneficiary which bears a statement that the applicant is in breach of contract.
Which of the following statements is correct? The guarantor should:
A accept the demand but seek an additional statement from the beneficiary confirming the exact
nature of the breach.
B approach the applicant and obtain specific approval to pay the demand.
C honour the demand.
D reject the demand.

40. Under a standby letter of credit subject to UCP 600 or ISP98 versus a demand guarantee subject
to URDG 758, which of the following are not dealt with in URDG 758 but are in UCP 600 and
ISP98?
1. The applicant.
2. The instructing party.
3. The confirming bank/party.
A 1 only.
B 2 only.
C 3 only.
D 1 and 2 only.

41. A URDG 758 guarantee provides a reduction clause upon presentation of conforming
documents for each shipment under a letter of credit referred to in the guarantee. This clause is:
A a valid reduction clause if the beneficiary accepts it.
B a valid reduction clause if payments made under the letter of credit are made from or to the
accounts held with the guarantor.
C not a valid reduction clause.
D not a valid reduction clause because a reduction does not occur on a specific date.

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42. Bank S receives a request by SWIFT from Bank Z to advise a guarantee issued subject to
URDG758. Bank S has no correspondent relationship with Bank Z and is unable to authenticate the
guarantee. What action should Bank S not take?
A Advise the guarantee to the beneficiary, clearly stating in the covering advice that it has been
unable to authenticate the guarantee.
B Forward the guarantee to another bank that holds authentication arrangements with Bank Z.
C Refuse to action the request under advice to Bank Z only.
D Refuse to action the request under advice to both Bank Z and the beneficiary.

43. A URDG 758 guarantee requires any interest amount the beneficiary demands to be calculated
according to a formula specified in the guarantee. The beneficiary makes a complying presentation
and certifies the amount of interest owed as GBP 1,000,000. After the guarantor has paid the claim,
the instructing party tells the guarantor that the correct calculation of interest, according to the
formula specified in the guarantee, means the amount should have been GBP 800,000.
Which of the following statements is correct?
A If there is a second complying demand, the guarantor must withhold GBP 200,000 to redress
the previous overpayment.
B The instructing party is obliged to reimburse the guarantor in full because the guarantor is not
obliged to check the beneficiary‟s calculations.
C The instructing party is only obliged to reimburse the guarantor GBP 800,000 of the interest
element of the demand.
D The guarantor must seek repayment from the beneficiary of GBP 200,000.

44. A complying presentation contains an: „extend or pay‟ statement. The undertaking will expire
in one day. Which of the following statements is true?
A ISP98 offers the issuer one day to determine whether or not to extend the term of its credit.
B UCP 600 offers the issuer one day to determine whether or not to extend the term of its credit.
C URDG 458 offers the guarantor a maximum of 30 banking days to decide whether or not to
extend.
D Under URDG 758 the guarantor may suspend payment for a maximum of 30 calendar days
following receipt of the demand.

45. Bank Z determined that a presentation was discrepant because the required statement indicated
that „grade A oil‟ was shipped; however, the required invoice copies stated „grade C oil‟.
If the guarantee only stated the merchandise as „oil‟, which of the following statements is true?
A Under ISP98, the drawing is complying.
B Under UCP 600 and URDG 758, the drawing should be deemed complying.
C Under UCP 600, ISP98 and URDG 758 rules, the drawing should be deemed complying.
D URDG 758, UCP 600 and ISP 98 state that the presentation is discrepant.

46. The instructing party‟s bank has issued a counter-guarantee in favour of a local bank for the
issuance of a local guarantee. The risks from the viewpoint of the instructing party are?
A It will be easier for the instructing party to solve problems when there are more parties involved.
B The instructing party also bears the risks of the terms set out in the guarantee.
C The counter-guarantee quotes exactly the same terms and conditions as the local guarantee.
D There are no additional charges other than charges from the counter-guarantor.

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47. Bank A issues a standby letter of credit. The beneficiary presents a demand for payment under
the standby. If the standby is subject to ISP98 and specifies no time period for examination, within
what timescale must Bank A complete its examination of the presentation?
A Within 2 business days.
B Within 7 business days.
C Within 10 calendar days.
D Within a time that is not unreasonable.

48. Which of the following is true with respect to a guarantee stating that it is subject to URDG?
A Due to the independent nature of the guarantee, the obligations to the instructing party could
be subject to URDG 458 and obligations to the beneficiary subject to URDG 758.
B It is the guarantors undertaking and it is up to the guarantor to decide which sets of rules are
applicable.
C It is up to the parties to agree upon URDG 458 or URDG 758 in the event of dispute.
D Where a guarantee is issued after 1 July 2010, URDG 758 automatically applies.

49. A bank‟s facilities unit has requested the bank‟s trade operations department to issue a trade
transaction on its behalf to cover rent payments due by the bank to the leasing party. Under which
rules can a bank issue an undertaking to support its own obligations?
A ISP98 only.
B UCP 600 or ISP98 only.
C Either UCP 600, URDG 758 or ISP98.
D None, a request from issuance must come from a third party.

50. Which of following is true for a URDG 758 guarantee with non-documentary conditions?
A Even if no document is stated to comply with a condition the beneficiary must in the event of a
demand present supporting third-party documentation.
B The applicant and beneficiary have agreed upon the wording and the guarantor must therefore
issue the guarantee without redrafting the text.
C The applicant can rely on the guarantor not paying any demands should non-documentary
conditions exist.
D The general rule is that the guarantor will deem a non-documentary condition as not stated and
will disregard it.

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Section B

51. A bank issued a URDG 758 guarantee on 20 July 2011 with a validity of one year. On 25 June
2012, a demand was presented to the bank which was non-complying. The bank decided not to
reject the demand and on 28 June 2012 approached the instructing party for a waiver of
discrepancies. On 3 July 2012 the instructing party advised the guarantor that they would not accept
the discrepancies and the guarantor then issued the beneficiary rejection notice on the same day.
Which of the following is correct?
A The bank acted according to the rules.
B The waiver procedure did not extend the time for rejection and the guarantor is subject to the
preclusion rule.
C The waiver procedure did not extend the time for rejection but there is no preclusion rule in
URDG 758.
D The waiver procedure extended the time for rejection.

52. When comparing the rules that relate to standby letters of credit issued subject to ISP98 and
guarantees issued subject to URDG 758, which of the following sets of statements are correct?
1. An applicant / instructing party must object to the issuer‟s honour of a non-complying
presentation
made against either a standby letter of credit or guarantee within a reasonable time after receipt by
the applicant of those documents.
2. Demands for payment submitted under either a standby letter of credit or guarantee must be
supported by a statement indicating the nature of any breach.
3. Documents issued by either the applicant or the beneficiary must be in the language of the
standby letter of credit or guarantee.
4. The issuer‟s failure to give timely notice of rejection of a non-complying presentation made
against either a standby letter of credit or guarantee leads to preclusion.
A 1, 2 and 4 only.
B 2 and 3 only.
C 3 and 4 only.
D 4 only.

53. A URDG 758 guarantee is issued that prohibits multiple demands. The first demand was not
complying. Within the validity of the guarantee, the beneficiary presented another demand. The
guarantor did not reject it and approached the instructing party for a waiver, which was granted.
The guarantor:
A can choose whether to pay or not.
B has to accept the waiver and pay.
C was wrong to ask for a waiver and should reject the demand.
D was wrong to ask for a waiver, because multiple demands are prohibited under the guarantee.

54. Bank D issues an amendment to a warranty guarantee subject to URDG 758 increasing the
amount from CAD 30,000 to CAD 50,000 and requiring an additional independent valuation
certificate. Bank D subsequently receives a demand from the beneficiary in accordance with the
terms of the original guarantee but for the increased amount of CAD 50,000. Submitted with the
demand is an acceptance by the beneficiary of the increase in amount and a rejection of the
additional document. Which of the following statements is correct?
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A The beneficiary‟s partial acceptance takes effect as an acceptance of both parts of the
amendment.
B The demand is non-complying as the amendment must be accepted or rejected in full.
C The demand must be paid by Bank D as presented by the beneficiary.
D The demand must be paid by Bank D, but only up to CAD 30,000.

55. A performance guarantee is issued by Bank C subject to URDG 758 for CNY 100,000 with a
condition that only one demand may be made. The beneficiary makes a demand for CNY 70,000
but Bank C rejects the demand as non-complying.
The beneficiary subsequently makes a separate complying demand for CNY 60,000. What action
must now be taken by Bank C?
A Pay CNY 30,000 being the balance remaining had the first demand been paid.
B Pay the second demand in full as complying with the terms of the guarantee.
C Reject the demand as the amount is different from that specified in the guarantee.
D Reject the demand as the terms of the guarantee allow only one demand.

56. A standby letter of credit issued subject to URDG 758 allows for drawings to be made by an
authenticated SWIFT. A presentation is made via an MT999 indicating the correct drawing
statement and it is made within the time limitations indicated in the standby. Which of the
following
is false?
A A standby letter of credit can be made subject to URDG 758.
B An MT999 is not an authenticated message.
C The issuer is expected to pay the complying presentation.
D The presentation is non-complying.

57. A guarantor receives a complying demand with an „extend or pay‟-type notice against a demand
guarantee subject to URDG 758. The guarantor suspends payment for 30 days, seeks instructions
from the instructing party and starts an internal credit review of the instructing party.
On the 15th day from presentation the guarantor decides to refuse the request to extend. Which of
the following is true?
A Extend or pay statements allow the guarantor to suspend their decision to honour until the
guarantee‟s expiry date.
B If the instructing party confirms its instruction to extend before the end of the 30-day extension
period, the guarantor must extend.
C Once the guarantor has decided it will not extend, it is bound to honour the presentation and
tell the instructing party of its decision without delay.
D The presentation of an extend or pay request means that the guarantor has 30 calendar days
to determine whether the presentation is complying.

58. A demand guarantee subject to URDG 758 is issued by the guarantor, which has not yet
collected its charges. The guarantor receives a complying demand but refuses to pay the drawing
until it receives payment of its charges. According to URDG, which of the following is true?
A If the guarantee indicated the amount due and that all issuance charges are for the beneficiary‟s
account, the beneficiary is not entitled to present a demand until it has paid those charges.
B If the guarantee states that the charges are for the account of the beneficiary, then the guarantor
can deduct its charges from the payment.
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C The guarantor is entitled to delay payment of the demand until its charges are paid.
D The instructing party must reimburse the guarantor for its fees.

59. A demand guarantee subject to URDG 758 calls only for the „beneficiary‟s demand for
payment‟.
The beneficiary presents a document, titled „Demand‟, quoting the demand guarantee number, and
states: „We are entitled to payment in accordance with the contracted terms. Please remit…‟
Which of the following statements are correct?
1. The demand is complying.
2. The demand is discrepant because the underlying reason for the drawing is not stated.
3. The demand is discrepant because the document is titled „Demand‟.
A 1 only.
B 2 only.
C 3 only.
D 2 and 3 only.

60. A counter-guarantee subject to URDG 758 calls only for the „guarantor‟s SWIFT demand for
payment‟. The guarantor presents a signed statement to the counter-guarantor quoting the
guarantor‟s guarantee number and states „We are entitled to payment. Please remit…‟
Which of the following statements is correct?
A The demand is complying.
B The demand is complying because a signed statement was provided.
C The demand is discrepant because it does not state in what respect the applicant is in breach
of its obligations under the underlying relationship.
D The demand is discrepant because the statement does not indicate that the guarantor has
received a complying demand from the beneficiary.

An initiative by S M Sultan Kabir CDCS, CSDG

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Questions 61–66 appear on pages 23–25.

Please also refer to the separate Case Study Booklet.

Instructions to candidates
1. Open this document when instructed to do so.
2. Read the instructions on the answer sheet carefully.
3. Use the examination answer sheets provided for your answers. Please do not note your
answers in this booklet, as they will not be recorded.
4. Hand in all the examination materials before you leave the examination, including the
answer sheet, the question paper, case study / simulation booklets, and have them checked
by the invigilator. Failure to do so will invalidate your entry.

An initiative by S M Sultan Kabir CDCS, CSDG

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For Questions 61 and 62 please refer to the counter-guarantee and good performance
guarantee in the case study booklet.

61. Both the counter-guarantee and the guarantee contain automatic extension clauses. In order to
provide sufficient coverage to the guarantor, the counter-guarantee should require the counter
guarantor to give the guarantor how many days‟ notice that the counter-guarantee is not to be
automatically extended?

A. 60.
B. 90.
C. 120.
D. 124.

62. The guarantee issued by Export Import Bank allows for a tolerance of +/- minus 10 percent in
regard to its value. Under the counter- guarantee received from The Commercial Bank, the
maximum aggregate amount that can be claimed by the guarantor under the counter-guarantee is:

A. $225,000.00.
B. $350,000.00.
C. $254,000.00.
D. $275,000.00.

For question 63, please refer to the claim 1 documentation in the case study booklet.

63. With reference to claim 1, please select the appropriate response for EXPORT IMPORT BANK
from the following options:

A. Pay the claim.

B. Reject the claim because the amount of goods shipped is outside the tolerance range.
C. Reject the claim because 90 days have not passed since the date of the invoice.
D. Reject the claim because partial drawings are not allowed.
E. Reject the claim because the invoice does not bear the beneficiary‟s signature.

For question 64, please refer to the claim 2 documentation in the case study booklet.

64. The Commercial Bank has advised Export Import Bank that American Molding Company has
referred the underlying relationship to arbitration to resolve an underlying dispute with 888
Manufacturing Corporation With reference to claim 2, please select the appropriate response for
EXPORT IMPORT BANK from the following options:

A. Pay the claim.

B. Reject the claim because 90 days have not passed since the date of the invoice.
C. Reject the claim because document D has not been presented on a separate letter from
document A.
D. Reject the claim because the invoice value is greater than the guarantee value.
E. Suspend the claim until arbitration proceedings have been completed.
An initiative by S M Sultan Kabir CDCS, CSDG
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For question 65, please refer to the claim 3 documentation in the case study booklet.

65. With reference to claim 3, please select the appropriate response for The Commercial Bank
from the following options:

A. Pay the claim.

B. Reject the claim because the SWIFT message does not state documents A, B, C and D
are being forwarded separately.
C. Reject the claim because the SWIFT message type is not a MT760.
D. Reject the claim because the SWIFT has been sent after expiry of the guarantee.
E. Reject the claim because the value claimed is greater than the value of the counter
guarantee.

For question 66, please refer to the claim 4 documentation in the case study booklet.

66. On 21 September Export Import Bank provides 888 Manufacturing Corporation with notice by
courier that the guarantee is not to be automatically extended past the current expiry date. The
notice is received by courier and acknowledged by 888 Manufacturing Corporation on 25
September. With reference to the claim 4, which Export Import Bank received on 26 December,
please select the appropriate response for Export Import Bank from the following options:
A. Pay the claim irrespective of receipt of funds from the counter-guarantor.
B. Pay the claim only on receipt of funds from the counter-guarantor.
C. Reject the claim because documents A, B, C and D have not been presented.
D. Reject the claim because the notice not to review was delivered by courier rather than
recorded mail.
E. Reject the claim because there is still time before the 31 December for a replacement
guarantee to be issued.

An initiative by S M Sultan Kabir CDCS, CSDG

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Case study documents

In consideration of you, Export Import Bank, issuing your guarantee as requested, we The
Commercial Bank hereby open in your favour our irrevocable counter guarantee number
CGT12342016001.

Available against your authenticated SWIFT that you have duly issued your guarantee in the format
requested, and that you have received a claim in accordance with the terms of your guarantee, we
will unconditionally make the payment up to the Counter Guarantee amount.

This counter guarantee expires on 15 January 2017 and is subject to uniform rules for demand
guarantees, ICC publication No. 758.

In the event of a drawing under this counter guarantee our maximum aggregate liability is restricted
to USD 350,000.00 (Say US Dollars Three Hundred and Fifty Thousand 00/100).

We undertake to pay to you on your first authenticated SWIFT demand any amount up to the
maximum guarantee amount.

It is a condition of this counter-guarantee that it will be automatically extended without amendment

for an additional period of one year from the present and each future expiration date, unless not less
than one twenty (120) days prior to the then relevant expiration date, we notify you by
authenticated SWIFT of our intention not to review this counter-guarantee and after such expiry no
further demand may be made with recourse to us under this counter guarantee.

Please issue your guarantee in the below format

Quote

Date:…………
888 Manufacturing Corporation
62 South 2nd Street, Suite H
Deer Park, NY 11729

Dear Sirs,

Our irrevocable guarantee No…………………

We hereby issue our irrevocable guarantee No. in your favour for account of American Molding
Company for $350,000.00 (Plus or minus 10%) (US dollars three hundred and fifty thousand
00/100 only). Valid in Taipei until 31 December 2016.

Available for payment at sight at the counters of Guarantor………….., on presentation of the

following documents:

An initiative by S M Sultan Kabir CDCS, CSDG

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A) Your signed statement that American Molding Company has failed to make payment to you
within 90 days of the invoice date.

B) Copy invoice evidencing the value of the goods shipped.

C) Copy of the bill of lading.

D) Your signed and dated statement confirming that there is no dispute pending between you and
American Molding Company regarding conformity of the goods to the specification agreed
between you and American Molding Company.

It is a condition of this irrevocable guarantee that it shall be deemed to be automatically extended

without amendment for further periods of one (1) year from the present expiry date or any future
expiry date resulting from operation of this present condition, unless not less than one twenty (120)
days prior to any such expiry date we shall notify you by courier that we elect not to renew this
irrevocable guarantee for any such additional period, in which event this irrevocable guarantee shall
become null and void for all purposes, subject always to the provision that any sum (s) secured by
this irrevocable guarantee shall be payable up to such expiry against your claim hereunder by
registered mail quoting our irrevocable guarantee number …….. and stating that the amount there
under is due to you or that you have not received an acceptable alternative irrevocable guarantee,
standby letter of credit or other form of security.

Covering shipment of about 50 units of mold. Partial drawings are allowed.

Except so far as otherwise expressly stated this guarantee is subject to the uniform rules for demand
guarantees ICC publication No. 758.

Unquote

An initiative by S M Sultan Kabir CDCS, CSDG

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Guarantee issued by Export Import Bank against the counter guarantee issued by The
Commercial Bank.

12 February 2016
888 Manufacturing Corporation
62 South 2nd Street, Suite H
Deer Park, NY 11729

Dear Sirs,

Our irrevocable guarantee No. GT123420160001

We Export Import Bank hereby issue our irrevocable guarantee No. GT123420160001 in your
favour for account of American Molding Company for $350,000.00 (Plus or minus 10%) (US
dollars three hundred and fifty thousand 00/100 only). Valid in Taipei until 31 December 2016.

Available for payment at sight at the counters of Export Import Bank, on presentation of the
following documents:
A) Your signed statement that American Molding Company has failed to make payment to you
within 90 days of the invoice date.
B) Copy invoice evidencing the value of the goods shipped.
C) Copy of the bill of lading.
D) Your signed and dated statement confirming that there is no dispute pending between you and
American Molding Company regarding conformity of the goods to the specification agreed
between you and American Molding Company.

It is a condition of this irrevocable guarantee that it shall be deemed to be automatically extended

without amendment for further periods of one (1) year from the present expiry date or any future
expiry date resulting from operation of this present condition, unless not less than one-twenty (120)
days prior to any such expiry date we shall notify you by registered mail that we elect not to renew
this irrevocable guarantee for any such additional period, in which event this irrevocable guarantee
shall become null and void for all purposes, subject always to the provision that any sum (s)
secured by this irrevocable guarantee shall be payable up to such expiry against your claim
hereunder by registered mail quoting our irrevocable guarantee number GT123420160001 and
stating that (a) the amount there under is due to you or (b) that you have not received an acceptable
alternative irrevocable guarantee, standby letter of credit or other form of security until 10 days
prior to the expiry of this guarantee at the latest. In the latter case of (b) presentation of documents
A-D is not necessary.

Covering shipment of 50 units of mold (tolerance of +/- 10 percent)

Partial drawings allowed.

Except so far as otherwise expressly stated this guarantee is subject to the uniform rules for demand
guarantees ICC publication No. 758.

Yours Faithfully
An initiative by S M Sultan Kabir CDCS, CSDG
[email protected]
Claim 1

888 Manufacturing Corporation

62 South 2nd Street, Suite H
Deer Park, NY 11729

21st December 2016

Export Import Bank
NY, USA

Re: Guarantee Ref GT123420160001 issued by Export Import Bank on behalf of American
Molding Company relating to the supply of Mold.

Dear Sirs,

With reference to the above-mentioned guarantee we are writing to request payment of

USD336,000 as American Molding Company has failed to make payment to 888 Manufacturing
Corporation within 90 days of the invoice date.

We can confirm that there is no dispute pending between 888 Manufacturing Corporation and
American Molding Company regarding the conformity of the goods to the specification agreed
between 888 Manufacturing Corporation and American Molding Company.

Enclosed with this letter is an invoice and Bill of Lading as referred to in the Guarantee.

Your urgent attention and payment is required.

Yours faithfully,

Mrs Balding

888 Manufacturing Corporation

An initiative by S M Sultan Kabir CDCS, CSDG

[email protected]
 BILL OF LADING – SHORT FORM – NOT
May 18, 2016 Page 1 of 47
NEGOTIABLE
SHIP FROM Bill of Lading Number:
888 Manufacturing Corporation
NY
SHIP TO Carrier Name: APL 0021
American Molding Company Trailer number: N/A
347 Tisdel Road
Serial number(s): N/A
Lake Ariel, PA 18436
THIRD PARTY FREIGHT CHARGES BILL
SCAC:
TO
American Molding Company Pro Number:

Special Instructions: Freight Charge Terms (Freight charges are

N/A prepaid unless marked otherwise):
Prepaid Collect 3rd Party
Master bill of lading with attached underlying
bills of lading.

CUSTOMER ORDER INFORMATION

Pallet/Sli
# of Wei p Additional Shipper
Customer Order No.
Packages ght (circle Information
one)
18491616 Y N

Grand Total
CARRIER INFORMATION
Handling
Package LTL Only
Unit
Qty Typ Qty Typ Wei HM Commodity Description NMF Class
e e ght (X) Commodities requiring special or C No.
additional care or attention in handling or
stowing must be so marked and packaged
as to ensure safe transportation with
ordinary care. See Section 2(e) of NMFC
item 360
Larg 362
1 1 1 MOLD S
e 4TN

Where the rate is dependent on value, shippers are COD Amount: $ __________
An initiative by S M Sultan Kabir CDCS, CSDG
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required to state specifically in writing the agreed or Fee terms: Collect Prepaid
declared value of the property as follows: “The Customer check acceptable
agreed or declared value of the property is
specifically stated by the shipper to be not exceeding
_______________ per _______________.
Note: Liability limitation for loss or damage in this shipment may be applicable. See 49 USC
§ 14706(c)(1)(A) and (B).
Received, subject to individually
determined rates or contracts that have
been agreed upon in writing between the
carrier and shipper, if applicable, otherwise The carrier shall not make delivery of this shipment
to the rates, classifications, and rules that without payment of charges and all other lawful fees.
have been established by the carrier and Shipper Signature ________________________________
are available to the shipper, on request, and
to all applicable state and federal
regulations.
Shipper Signature/Date Trailer Freight Counted: Carrier Signature/Pickup
A. HALLS Loaded: By shipper Date
By
This is to certify that the By driver/pallets Dny c
above named materials are shipper said to contain Carrier acknowledges
properly classified, packaged, By receipt of packages and
marked, and labeled, and are driver By driver/pieces required placards. Carrier
in proper condition for certifies emergency response
transportation according to information was made
the applicable regulations of available and/or carrier has
the DOT. the DOT emergency
response guidebook or
equivalent documentation in
the vehicle. Property
described above is received
in good order, except as
noted.

by Corpo
ra

tion Inc. INVOICE

An initiative by S M Sultan Kabir CDCS, CSDG

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888 Manufacturing Corporation INVOICE

62 South 2nd Street, Suite H

Deer Park, NY 11729

Sold to: INVOICE NUMBER 13944

Name American Molding Company INVOICE DATE 2 October 2016
Address CONTRACT 726729
347 Tisdel Road YOUR ORDER No. 1892738
Lake Ariel, PA 18436 TERMS Within 90 days
SALES REP Mr Frost

Shipped to: F.O.B. n/a

Same PREPAID or COLLECT COLL

Sales Tax Rate: 0.00%

QUANTITY DESCRIPTION UNIT PRICE AMOUNT
1 48 Units of Mold 7,000.00 336,000.00
Subtotal 336,000.00
Tax 0.00
Freight

336,000.00
DIRECT ALL INQUIRIES TO: MAKE ALL CHEQUES
PAYABLE TO:
Mrs Balding 888 Manufacturing Corporation
00 194 27 878 99
email: [email protected]

THANK YOU FOR YOUR BUSINESS!

An initiative by S M Sultan Kabir CDCS, CSDG

[email protected]
Claim 2
888 Manufacturing Corporation
62 South 2nd Street, Suite H
Deer Park, NY 11729

21st December 2016

Export Import Bank
NY, USA

Re: Guarantee Ref GT123420160001 issued by Export Import Bank on behalf of American
Molding Company relating to the supply of Mold.

Dear Sirs,

With reference to the above-mentioned guarantee, we are writing to request payment of

USD375,000 as American Molding Company has failed to make payment to 888 Manufacturing
Corporation within 90 days of the invoice date.

We can confirm that there is no dispute pending between 888 Manufacturing Corporation and
American Molding Company regarding the conformity of the goods to the specification agreed
between 888 Manufacturing Corporation and American Molding Company.

Enclosed with this letter is an invoice and Bill of Lading as referred to in the Guarantee.

Your urgent attention and payment is required.

Yours faithfully,

Mrs Balding

888 Manufacturing Corporation

An initiative by S M Sultan Kabir CDCS, CSDG

[email protected]
 BILL OF LADING – SHORT FORM – NOT
May 18, 2016 Page 1 of 47
NEGOTIABLE
SHIP FROM Bill of Lading Number:
888 Manufacturing Corporation
62 South 2nd Street, Suite H
Deer Park, NY 11729
SHIP TO Carrier Name: APL 0021
American Moulding Company Trailer number: N/A
347 Tisdel Road
Serial number(s): N/A
Lake Ariel, PA 18436
THIRD PARTY FREIGHT CHARGES BILL
SCAC:
TO
American Moulding Company Pro Number:
347 Tisdel Road
Lake Ariel, PA 18436
Special Instructions: Freight Charge Terms (Freight charges are
N/A prepaid unless marked otherwise):
Prepaid Collect 3rd Party
Master bill of lading with attached underlying
bills of lading.

CUSTOMER ORDER INFORMATION

Pallet/Sli
# of Wei p Additional Shipper
Customer Order No.
Packages ght (circle Information
one)
18491616 Y N

Grand Total
CARRIER INFORMATION
Handling
Package LTL Only
Unit
Qty Typ Qty Typ Wei HM Commodity Description NMF Class
e e ght (X) Commodities requiring special or C No.
additional care or attention in handling or
stowing must be so marked and packaged
as to ensure safe transportation with
ordinary care. See Section 2(e) of NMFC
item 360
Larg 362
1 1 1 MOLD S
e 4TN

An initiative by S M Sultan Kabir CDCS, CSDG

[email protected]
Where the rate is dependent on value, shippers are
required to state specifically in writing the agreed or
COD Amount: $ __________
declared value of the property as follows: “The
agreed or declared value of the property is Fee terms: Collect Prepaid
specifically stated by the shipper to be not exceeding Customer check acceptable
_______________ per _______________.
Note: Liability limitation for loss or damage in this shipment may be applicable. See 49 USC
§ 14706(c)(1)(A) and (B).
Received, subject to individually
determined rates or contracts that have
been agreed upon in writing between the
carrier and shipper, if applicable, otherwise The carrier shall not make delivery of this shipment
to the rates, classifications, and rules that without payment of charges and all other lawful fees.
have been established by the carrier and Shipper Signature ________________________________
are available to the shipper, on request, and
to all applicable state and federal
regulations.
Shipper Signature/Date Trailer Freight Counted: Carrier Signature/Pickup
A. HALLS Loaded: By shipper Date
By
This is to certify that the By driver/pallets Dny c
above named materials are shipper Carrier acknowledges
said to contain
properly classified, packaged, By receipt of packages and
marked, and labeled, and are driver By driver/pieces required placards. Carrier
in proper condition for certifies emergency response
transportation according to information was made
the applicable regulations of available and/or carrier has
the DOT. the DOT emergency
response guidebook or
equivalent documentation in
the vehicle. Property
described above is received
in good order, except as
noted.

An initiative by S M Sultan Kabir CDCS, CSDG

[email protected]
888 Manufacturing Corporation INVOICE

62 South 2nd Street, Suite H

Deer Park, NY 11729

Sold to: INVOICE NUMBER 13944

Name American Molding Company INVOICE DATE 15 September 2016
Address CONTRACT 726729
347 Tisdel Road YOUR ORDER No. 1892738
Lake Ariel, PA 18436 TERMS Within 90 days
SALES REP Mr Frost

Shipped to: F.O.B. n/a

Same PREPAID or COLLECT COLL

Sales Tax Rate: 0.00%

QUANTITY DESCRIPTION UNIT PRICE AMOUNT
1 56 units of Mold 394,237.00 394,237.00
Subtotal 394,237.00
Tax 0.00
Freight

394,237.00
DIRECT ALL INQUIRIES TO: MAKE ALL CHEQUES
PAYABLE TO:
Mrs Balding 888 Manufacturing Corporation
00 194 27 878 99
email: [email protected]

THANK YOU FOR YOUR BUSINESS!

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Claim 3

SWIFT MESSAGE - MT799

EXPLANATION FORMAT

SENDER XYZZTWTP
MESSAGE TYPE 799
RECEIVER PPZDGB2L
DATE 5 JANUARY 2017

MESSAGE TEXT
TRANSACTION REFERENCE NUMBER:20:BVC96372
PROPRIETARY MESSAGE:
:27:1/1
:20: GT123420160001
:21: 18988097

WE REFER TO YOUR COUNTER GUARANTEE 18988097 AND CAN CONFIRM THAT WE

HAVE RECEIVED A CLAIM IN ACCORDANCE WITH THE TERMS OF OUR GUARANTEE
GT123420160001.

ACCORDINGLY, WE HEREBY DEMAND PAYMENT OF USD 364,015.00 BEING THE

VALUE OF THE CLAIM PLUS USD 15.00 IN SWIFT COSTS.

PLEASE MAKE PAYMENT IN 5 BUSINESS DAYS TO OUR ACCOUNT HELD WITH US

BANK.

REGARDS
EXPORT IMPORT BANK - 5 JANUARY 2017

An initiative by S M Sultan Kabir CDCS, CSDG

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 BILL OF LADING – SHORT FORM – NOT
May 18, 2016 Page 1 of 47
NEGOTIABLE
SHIP FROM Bill of Lading Number:
888 Manufacturing Corporation
62 South 2nd Street, Suite H
Deer Park, NY 11729
SHIP TO Carrier Name: APL 0021
American Moulding Company Trailer number: N/A
347 Tisdel Road
Serial number(s): N/A
Lake Ariel, PA 18436
THIRD PARTY FREIGHT CHARGES BILL
SCAC:
TO
American Moulding Company Pro Number:
347 Tisdel Road
Lake Ariel, PA 18436
Special Instructions: Freight Charge Terms (Freight charges are
N/A prepaid unless marked otherwise):
Prepaid Collect 3rd Party
Master bill of lading with attached underlying
bills of lading.

CUSTOMER ORDER INFORMATION

Pallet/Sli
# of Wei p Additional Shipper
Customer Order No.
Packages ght (circle Information
one)
18491616 Y N

Grand Total
CARRIER INFORMATION
Handling
Package LTL Only
Unit
Qty Typ Qty Typ Wei HM Commodity Description NMF Class
e e ght (X) Commodities requiring special or C No.
additional care or attention in handling or
stowing must be so marked and packaged
as to ensure safe transportation with
ordinary care. See Section 2(e) of NMFC
item 360
Larg 362
1 1 1 MOLD S
e 4TN

An initiative by S M Sultan Kabir CDCS, CSDG

[email protected]
Where the rate is dependent on value, shippers are
required to state specifically in writing the agreed or
COD Amount: $ __________
declared value of the property as follows: “The
agreed or declared value of the property is Fee terms: Collect Prepaid
specifically stated by the shipper to be not exceeding Customer check acceptable
_______________ per _______________.
Note: Liability limitation for loss or damage in this shipment may be applicable. See 49 USC
§ 14706(c)(1)(A) and (B).
Received, subject to individually
determined rates or contracts that have
been agreed upon in writing between the
carrier and shipper, if applicable, otherwise The carrier shall not make delivery of this shipment
to the rates, classifications, and rules that without payment of charges and all other lawful fees.
have been established by the carrier and Shipper Signature ________________________________
are available to the shipper, on request, and
to all applicable state and federal
regulations.
Shipper Signature/Date Trailer Freight Counted: Carrier Signature/Pickup
A. HALLS Loaded: By shipper Date
By
This is to certify that the By driver/pallets Dny c
above named materials are shipper Carrier acknowledges
said to contain
properly classified, packaged, By receipt of packages and
marked, and labeled, and are driver By driver/pieces required placards. Carrier
in proper condition for certifies emergency response
transportation according to information was made
the applicable regulations of available and/or carrier has
the DOT. the DOT emergency
response guidebook or
equivalent documentation in
the vehicle. Property
described above is received
in good order, except as
noted.

An initiative by S M Sultan Kabir CDCS, CSDG

[email protected]
888 Manufacturing Corporation INVOICE

62 South 2nd Street, Suite H

Deer Park, NY 11729

Sold to: INVOICE NUMBER 13944

Name American Molding Company INVOICE DATE 15 September 2016
Address CONTRACT 726729
347 Tisdel Road YOUR ORDER No. 1892738
Lake Ariel, PA 18436 TERMS Within 90 days
SALES REP Mr Frost

Shipped to: F.O.B. n/a

Same PREPAID or COLLECT COLL

Sales Tax Rate: 0.00%

QUANTITY DESCRIPTION UNIT PRICE AMOUNT
1 56 units of Mold 394,237.00 294,237.00
Subtotal 294,237.00
Tax 0.00
Freight

294,237.00
DIRECT ALL INQUIRIES TO: MAKE ALL CHEQUES
PAYABLE TO:
Mrs Balding 888 Manufacturing Corporation
00 194 27 878 99
email: [email protected]

THANK YOU FOR YOUR BUSINESS!

An initiative by S M Sultan Kabir CDCS, CSDG

[email protected]
Claim 4
888 Manufacturing Corporation
62 South 2nd Street, Suite H
Deer Park, NY 11729

26th December 2016

Export Import Bank
NY, USA

Re: Guarantee Ref GT123420160001 issued by Export Import Bank on behalf of American
Molding Company relating to the supply of Mold.

Dear Sirs,
With reference to the above-mentioned guarantee we are writing to request payment of USD
364,000 as the claim amount is due and 888 Manufacturing Corporation have not received an
acceptable alternative irrevocable guarantee, standby letter of credit or other form of security.

Your urgent attention and payment is required.

Yours faithfully,

Mrs Balding

888 Manufacturing Corporation

An initiative by S M Sultan Kabir CDCS, CSDG

[email protected]
Simulation Exercises 1–6

Instructions to candidates

1. Open this document when instructed to do so.

2. Read the instructions on the answer sheet carefully.

3. Use the examination answer sheets provided for your answers. Please do not note your answers
in this booklet, as they will not be recorded.

4. Hand in all the examination materials before you leave the examination, including the answer
sheet, the question paper, case study / simulation booklets, and have them checked by the
invigilator. Failure to do so will invalidate your entry.

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SIMULATION 1
Instructions to candidates:
• Identify the five issues that are preventing the prompt issuance of the guarantee in the checklist
below.
• Transfer your answer from the checklist to the main answer sheet.
1 There is a discrepancy between the guarantee amount and the
percentage value of the advance payment.
□
2 Effectiveness of the guarantee.
□
3 All charges are account of the beneficiary.
□
4 Detailed address of the beneficiary is missing.
□
Advance payment guarantee amount is not consistent with the
5
payment terms. □
The payment of additional interest is not possible under an
6
advance payment guarantee. □
7 The application does not ask for special guarantee wording.
□
8 The currency of the guarantee is inconsistent with the currency of
the contract. □
9 The reduction mechanism is absent.
□
The effective date of the guarantee is before the issuance date of
10
the application. □

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SIMULATION 2
Instructions to candidates:
• Identify the five correct statements in the checklist below.
• Transfer your answer from the checklist to the main answer sheet.

CHECKLIST
1 The condition of initial effectiveness of this guarantee is a non
documentary condition so it has to be disregarded.
□
As the guarantee does not state it is payable on the first demand
2
from the beneficiary, the guarantee in this aspect will be ruled by □
Italian law.
The bankers' confirmation of authorised signatories must be
3
provided in a separate document. □
4 This guarantee is not freely transferable.
□
The condition that the guarantee will remain in force until all
5
goods have arrived at site will be disregarded. □
The governing law of this guarantee will be that of the location
6
of the guarantor’s branch issuing the guarantee. □
7 This guarantee will fall under US jurisdiction.
□
As nothing is stated in the text of the guarantee about the
8
liability for charges involved, all charges will be for the □
beneficiary.
There is no requirement for the guarantor to independently
9
verify whether the goods have arrived on site. □
This guarantee will terminate on 12-06-2021, as the expiry
10
event is non-documentary. □

An initiative by S M Sultan Kabir CDCS, CSDG

[email protected]
PERFORMANCE GUARANTEE

888 Manufacturing Corporation

62 South 2nd Street, Suite H
Deer Park, NY 11729
Dear Sirs,

We, Exim BANK, acting through our branch in NY…………, hereby establish in your favour the
following performance guarantee:
OUR REFERENCE: Guarantee number IGT2018001
APPLICANT: American Molding Company with registered office at………
AMOUNT:1,500,000.000 USD
COVERING: The performance by American Molding Company of its liabilities as per article 20,
S&P Agreement dated 12-01-2018.

This guarantee will be effective from the date you return to us the advanced payment guarantee
nº……… we issued in your favour on 01-04-2018

In case of Applicant‟s failure to fulfill the contract, we, Exim BANK, hereby irrevocably undertake
to pay you any amount up to 1,500,000.000 USD on receipt of your demand, certifying that
American Molding Company has not fulfilled its obligations in reference to said Agreement and
specifying in which way they have so failed.

Claims as aforesaid must bear the confirmation of your bankers that the signatures appearing
thereon are valid and binding on 888 Manufacturing Corporation.

This guarantee will remain in force until all goods have arrived at site. Your claims, if any, must
reach us in good order on or before that event‟s date.

This guarantee has today been recorded in the Special Register for Guarantees with number
IGT2018001.

This guarantee is subject to the Uniform Rules for Demand Guarantees, ICC publication 758. and is
issued under Italian law and the Italian courts have jurisdiction. In the event of contradiction
between Italian law and URGD 758, URDG 758 will take precedence.
Yours faithfully,

WHITE BANK ……………………….., on 12-06-2018

An initiative by S M Sultan Kabir CDCS, CSDG

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SIMULATION 3
Instructions to candidates:
• Identify the five incorrect statements in the checklist below.
• Transfer your answer from the checklist to the main answer sheet.

CHECKLIST

The counter-guarantee must specify the language in which the

1
Inspection certificate is to be presented. □
The guarantee is not transferable.
2
□
It is practically impossible for the guarantor to make a
3
complying presentation under the counter-guarantee. □
The guarantee has been issued in accordance with the
4
instructions contained in the counter-guarantee. □
The guarantor will have 5 business days, following the date of
5
presentation, to examine any demand. □
6 The beneficiary may not make a partial demand.
□
The extension clause in the counter-guarantee is compatible
7
with the guarantee. □
8 The counter-guarantee is not subject to URDG 758.
□
The guarantor must, within 5 calendar days, inform the
9
counter-guarantor of any complying demand. □
The counter-guarantor instructs the guarantor to issue a
10
guarantee subject to a specific jurisdiction, but the guarantee □
is issued subject to a different jurisdiction.

An initiative by S M Sultan Kabir CDCS, CSDG

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You, a bank in Vietnam, receive a counter-guarantee in the format of Appendix A from Bank A
which has requested you to issue a guarantee in the format of Appendix B.

Appendix A – Counter-guarantee received from Bank A

At the request of Stamp Inc... please issue on our full responsibility and against our counter
guarantee NO.XXX. Your tender guarantee for the amount of 110,000 Euros in favour of
McConnell plc as follows:

“Quote

In consideration of your issuing at our request a guarantee in favour of McConnell Plc ...
hereinafter called “the beneficiary” for the amount of 110,000 Euros ... (in words) as requested
above, we (name of the bank) hereinafter called “the bank” hereby undertake to indemnify you
against all proven losses, expenses or damages which may arise out of any claim made as a result of
your having given such a guarantee, and we hereby undertake to reimburse you without delay and
at your first simple cable/telex/SWIFT demand accompanied by the inspection certificate,
certifying the breach of underlying relationship any amount you may be called upon
to pay under the said guarantee, despite any contestation between Stamp Inc ... and McConnell Plc
... without it being necessary for you to produce or adduce any proof(s) or any judicial or
administrative proceedings whatsoever in support of your claim.

We further agree that any request made upon you by the beneficiary for payment of any sum shall
constitute a sufficient authority to you for making such payment without any obligation on your
part to inquire whether such amount is in fact due to them. While this indemnity covers payment by
us to you in the event stated above, it must be understood that our liability hereunder will not
exceed the aggregate amount of 110,000 Euros ... (in words) plus your commission and charges.

We also agree that this indemnity as well as all matters connected therewith shall be construed and
decided in conformity with the Malaysian Laws and the place of jurisdiction will be in Malaysia.
Your guarantee must consider the same governing law and jurisdiction as well.

This counter-guarantee is valid until 15/10/2014 and could be extended for one year only. Should
the bank not be in a position or not agree to extend this guarantee and/or if Stamp Inc ... fails to
provide the means for its extension and make the bank agree to such extension, then the bank
undertake to pay the amount referred to above to or to the order of Bank ….. (Beneficiary's bank)
without it being necessary for the latter to make a new claim.

Unquote”

An initiative by S M Sultan Kabir CDCS, CSDG

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Appendix B – Format of guarantee requested to issue

Application Form for the Issuance of Tender Guarantee

“Quote

Stamp Inc … is willing to participate in the tender, therefore we hereby become guarantor for the
above named in amount of 120,000 Euros... (In words). In the event that we are notified by
McConnell Plc...that the offer of the above named is accepted but the said firm has refused to sign
the contract or to submit the guarantee for due performance of the contract within the stated period,
we undertake to pay the above mentioned amount of 120,000 Euros (in words) in favour of
McConnell Plc ... as soon as we receive the first written demand of McConnell Plc ... without any
need to prove the correctness / accuracy of same or to issue any form or to take any action through
administrative or legal channels.

This guarantee is valid up until the close of business on 01/10/2014 and is automatically extended
on each anniversary of that date unless the guarantor notifies the beneficiary that the guarantee will
not automatically extend, giving at least 60 days notice of termination.

This guarantee is issued subject to URDG 758.

Unquote”

An initiative by S M Sultan Kabir CDCS, CSDG

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SIMULATION 4

Instructions to candidates:

• Identify the five correct statements in the checklist below.

• Transfer your answer from the checklist to the main answer sheet.

CHECKLIST
As the guarantee text does not state a place for presentation,
1
demands may be submitted to any branch of Exim Bank in the □
country of issue.
The guarantee text does not override the need for presentation of a
2
statement indicating the breach in the underlying contract. □
The percentage of the contract covered by the guarantee is
3
inconsistent for a performance guarantee. □
The guarantee has been issued in accordance with the instructions
4
contained in the counter-guarantee. □
Any demands submitted must be authenticated by the beneficiary’s
5
bankers. □
6 URDG 758 will overrule English law in any case.
□
by obtaining the guarantors consent, beneficiary of this guarantee
7 may assign the proceeds. □
The beneficiary is required to identify the guarantee on any
8
complying demand presented to the guarantor. □
A demand can be submitted by another mode of delivery other than
9
that stated in the guarantee, provided that such demand is □
presented on or before expiry at the place of presentation.
The original guarantee must be returned to the guarantor for the
10
expiry date to be considered effective. □

An initiative by S M Sultan Kabir CDCS, CSDG

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PERFORMANCE GUARANTEE

888 Manufacturing Corporation

62 South 2nd Street, Suite H
Deer Park, NY 11729
(hereinafter called the "Buyer")
Dear Sirs,
Guarantee no. 140801GT1234
We are informed that you and our customer, American Molding Company (hereinafter called the
"Seller") have entered into a contract no 001.12345678910 for the sum of USD 100,000.00 for the
supply of Specialized Mold (hereinafter called the "Contract") and that under the terms and
conditions of the Contract the Buyer has to procure a performance guarantee for 50% of the total
Contract value plus interest of 10% in favour of the Seller.

Accordingly at the request of the Buyer we, Exim Bank, hereby guarantee payment to you of an
amount not exceeding, in aggregate, USD 50,000.00 (Say United States Dollars fifty thousand
only) in the event of the Buyer failing to fulfil his obligations under the Contract, on the following
terms.

We undertake to pay to you up to the above amount upon receipt of your first written demand,
delivered to us by international registered post. Such demand will be accepted by us as conclusive
evidence that such sum is due to you. In the event that you state in your demand that it concerns
only a partial payment under this Guarantee, the Guarantee will continue in force for the balance
until expiry.
This guarantee will remain valid and in force up to and including 31 July XXXX (hereinafter called
‘’the Expiry Date’’) and all demands must have been received by us on the Expiry Date at the
latest in order to be taken into consideration. After the Expiry Date this guarantee will be
considered null and void and the original of this Guarantee should be returned to us.

This guarantee is personal to yourselves and is not transferable.

This guarantee is subject to the Uniform Rules for Demand Guarantees, ICC publication no.
758, 2010 revision.

Any dispute arising out of or in connection with this guarantee (including the interpretation and
application of URDG 758) shall be governed by and construed in accordance with English Law
and the courts of England shall have exclusive jurisdiction to settle any dispute arising out of or
in connection with this Guarantee.

Yours Faithfully,
………………………….. …………………………..
Authorised Signature Authorised Signature
Exim Bank Exim Bank

An initiative by S M Sultan Kabir CDCS, CSDG

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SIMULATION 5

Instructions to candidates:
• Identify the five correct statements in the checklist below.
• Transfer your answer from the checklist to the main answer sheet.

CHECKLIST

Exim Bank was correct to pay the guarantee on or before the due
1
date, without regard to whether it would receive payment from □
United Bank.
Irrespective of force majeure event, Exim Bank must present its
2
demand under the counter-guarantee before 15th July 2016 to □
United Bank.
United Bank will be obliged to pay Bank A's demand only if it
3 receives Exim Bank's demand before 15 August 2016. □
The force majeure affecting United Bank does not result in an
4 extension of the guarantee issued by Exim Bank. □
Exim Bank's knowledge of the force majeure event does not affect
5
its obligation to the beneficiary under the guarantee. □
There is no obligation for United Bank, which was affected by force
6
majeure, to pay to the guarantor after the counter guarantee’s expiry □
date (15 July).
The counter guarantee expired on 14 August.
7
□
The counter guarantee will be extended by 30 days from 6
8 August 2016. □
The counter guarantee is extended until 15 August 2016.
9
□
The approach to force majeure under URDG 758 is different to
10
the approach in UCP 600 and ISP98. □

An initiative by S M Sultan Kabir CDCS, CSDG

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CLAIM

Exim Bank issued a guarantee on the instructions of United Bank and against its counter-guarantee
in favour of Beta. Both the guarantee and counter-guarantee are subject to URDG 758 with no
modification or exclusion. The guarantee will expire on 30 June 2016 and the counter-guarantee
expiration date is 15 July 2016.

An event of force majeure affecting United Bank occurred on 25 June and Exim Bank learned of
this on 27 June. Exim Bank (the guarantor) receives a demand under its guarantee on 28 June. The
demand was complying and it was paid by the guarantor.
Due to the force majeure event affecting United Bank, Exim Bank (the guarantor) was not able to
present a demand under the counter-guarantee.

United Bank resumed normal business after the cessation of force majeure on 5 August 2016, and
the united bank inform the cessation to Exim bank on 6th August. Exim Bank presented its demand
under the counter-guarantee on 20 August 2016. This demand was refused by the counter-guarantor
on the grounds that the counter-guarantee expired 30 days after 25 June 2016 and the guarantor has
no right to claim.

An initiative by S M Sultan Kabir CDCS, CSDG

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SIMULATION 6

Instructions to candidates:
• Identify the five correct statements in the checklist below.
• Transfer your answer from the checklist to the main answer sheet.

CHECKLIST
The guarantor in their claim correctly referred to the counter
1
guarantees reference number. □
The guarantor extends the guarantee after obtaining the counter-
2
guarantor’s written consent. □
The guarantor’s demand was received after expiry of the counter-
3
guarantee. □
The inspection certificate was not received by the guarantor.
4
□
The amount the guarantor is claiming under the counter guarantee
5
for charges and commission exceeds the relevant amount that the □
guarantor is entitled to claim under the counter-guarantee.
The amount of the guarantee demand under the counter guarantee
6
was less than the available amount of the guarantee, while partial □
payment was not permitted.
The accountant’s certificate for expenses and damages has not
7
been sent to the counter-guarantor. □
According to article 15(a and b) of URDG 758 the demand should be
8
accompanied by the supporting statement unless it expressly □
excludes. This statement was not presented.
The demand under the counter-guarantee was sent via SWIFT.
9
□
The requirement for the demand under the counter guarantee was
10
not satisfied by the guarantor. □

An initiative by S M Sultan Kabir CDCS, CSDG

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CLAIM

FORM OF COUNTER-GUARANTEE

In consideration of your issuing at our request a guarantee in favour of All in One Trading
Ltd.(hereinafter called „beneficiary‟) for the amount of USD15,000,000.00 (Fifteen Million Pounds
Sterling) in respect of the good performance by Wilmer Inc. (hereafter called „applicant‟) in respect
of contract number 458/HJ for the construction of a series of hydro-electric plants, we, PDM Bank,
hereby irrevocably and unconditionally undertake to indemnify you against:

• any claim made by the beneficiaries for the amount of the guarantee
• all losses, expenses or damages that you may incur as a result of having been given such
guarantee up to a maximum amount of USD 150,000.00 (One Hundred and Fifty Thousand Pounds
Sterling).

Your demand for payment should be accompanied by all of the following documents:

• an inspection certificate issued by KES confirming the applicant‟s shortcomings

• a copy of a certificate for losses, expenses or damages certified by an accountant
• a copy of the complying demand of the beneficiary presented to you, in paper form, delivered
only by TNT, without a need of legal or judicial action or any obligation on your part to inquire
whether such amount is in fact due to the beneficiary.

Partial payment under the guarantee is not allowed.

This counter-guarantee is valid up until the close of business at our offices on 10 March 2013 plus
an additional 30 calendar days and is extendable at the request of the beneficiary for one year only
against our written agreement to that effect.

It must be understood that our liability hereunder will not exceed the aggregate amount of USD
15,165,000.00 (Fifteen Million, One Hundred and Sixty Five Thousand US DOLLAR) plus losses,
expenses or damages (USD 150,000.00) plus your commission and charges not to exceed
USD15,000.00 .

Please issue your guarantee in the English language and subject to URDG 758.

An initiative by S M Sultan Kabir CDCS, CSDG

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FORM OF GUARANTEE

With reference to contract number 458/HJ signed and exchanged between Wilmer Inc. (hereinafter
called „applicant‟) and All in One Trading Ltd (hereinafter called „beneficiary‟) for the construction
of a series of hydro-electric plants, we, Exim Bank, guarantee that if the applicant in the opinion
and judgement of the beneficiary fails to perform any commitments of the above contract, we will
pay to the beneficiary any amount requested by them for any cause or reason, immediately upon
receipt of their first written demand for payment accompanied by an inspection certificate issued by
KES confirming the applicants shortcomings, and without a need for legal or judicial action.

Partial payment is not allowed.

This guarantee is valid until the close of business at our offices on 5 March 2014 and is extendable
at the request of the beneficiary.

In the case that we are unable or unwilling to extend the period of this letter of guarantee, or if the
applicant fails to meet the requirements needed for the extension of this guarantee, then we shall
pay the above amount to, or in favour of, the beneficiary without any need for a repeated demand.

This guarantee is subject to the provisions of URDG 758

ADDITIONAL INFORMATION

At the request of the beneficiary, the guarantor extends the guarantee until 10 March 2014 with no
attainment of counter-guarantor‟s written consent.

On 8 March 2014 the guarantor received a written demand for payment with an inspection
certificate which it found complying and paid the guarantee amount.

On 10 March 2014 the guarantor sent the counter-guarantor a message via SWIFT that a complying
demand had been received and paid. The guarantor asked the counter-guarantor for
USD15,000,000.00 plus USD165,000.00 for charges and its commission.

The guarantor‟s claim was rejected by the counter-guarantor.

An initiative by S M Sultan Kabir CDCS, CSDG

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