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  • 20 Marks

PBL – OCT 2022 – L3 – Q7 – Legal Mortgage over Leasehold Interest

Outline key considerations for taking a legal mortgage over leasehold property and steps to perfect it for a sole proprietorship loan.

Amoasi Enterprise is a sole proprietorship owned and controlled by John Amoasi. The business is engaged in the supply of chips and stones for building projects. John Amoasi has applied for a loan of GHC 500,000 for the purchase of a used tipper truck. He shows you an Indenture covering his Leasehold interest in a property located a Winneba valued GHC 1,000,000.00.

(a) What key consideration would you have in mind in taking a legal mortgage over a leasehold interest? [8 Marks]

(b) Outline the steps which you would take to acquire a legal mortgage over the property in such a manner that the bank’s interest is absolutely protected. [12 Marks]

[Total marks:20]

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  • 20 Marks

PBL – OCT 2022 – L3 – Q6 – Alternative Securities for Construction Loans and Lender Remedies

Identify alternative security for a construction loan where traditional assets are unsuitable, and outline steps to perfect it; list key remedies under the Borrowers and Lenders Act 2020 for borrower default.

(a) Your key customer BBA Construction Ltd. is engaged in a contract for the construction of a 200 kilometer road in the Central Region. He has completed over 60 % of the project and has certified works of GHC 800,000 to be paid. He is applying for working capital loan of GHC 500,000 to purchase materials for the project.

He has no security to offer save the assets of the company which comprise a one storey office building and the road construction equipment. Your managing director is not enthused about taking a fixed and floating charge over the assets of the company as they are subject to rapid wear and tear. The key person Mr. Aras also does not have any personal landed property to offer.

From the above, identify what alternative security may be available in the circumstances and how you would proceed to take the security to ensure that the bank’s interest is protected. [16 Marks]

(b) You have been asked to deliver a lecture on the remedies of a lender in the event of a borrower defaulting in the servicing of a facility. Mention the four key remedies provided under the Borrowers and Lenders Act (2020) Act 1052. [4 Marks]

[Total marks:20]

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  • 20 Marks

POB – LP OCT 2022 – L3 – Q4 – Collecting Bank Duties and Protections in Cheque Collection

A bank collects a stolen cheque for a fraudulent customer, opens an account after clearance, allows withdrawal, and faces a lawsuit from the drawer; questions cover definition of collecting bank, duties, statutory protections, common law defences, and applicability of protection.

As a new Manager at the Edubiase branch of your bank, in the course of your work, your branch has collected a cheque for the account of a customer who turned out not to be the true owner of the cheque. Your Operations Manager did not open the account straightaway but for reasons unknown to you, he told the customer Timothy Ankrah that the bank would not open the account immediately but would only open the account if the cheque of GHC 500,000 the prospective account holder presented was cleared. After the cheque had cleared, your Operations Manager proceeded to open the account and the very next day, Timothy withdrew an amount of GHC 400,000.00 which he claimed was for the purchase of a car.

It transpires that the cheque had been stolen and Timothy was only an impersonator. Timothy is nowhere to be found.

The drawer of the cheque Mr. Banson has sued the bank for refund of the monies he has lost.

(a) What is a collecting bank? [2 Marks]

(b) Mention three duties of a collecting bank. [3 Marks]

(c) Mention and explain the statutory protection available to a collecting bank that collects a cheque for a party who is not the true owner of the cheque? [9 Marks] (d) What are the common law defences available to a collecting bank? [4 Marks]

(e) Will the bank be able to avail itself of the statutory protection? [2 Marks]

[Total marks:20]

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  • 20 Marks

PBL – OCT 2022 – L3 – Q3 – Company Objects Amendment and Cheque Handling Policies

Legal principles for advising on amending company objects for new business ventures and handling a cheque payable to a related company for crediting to a personal account.

State the legal principles you would take into consideration in resolving the following legal matters that have come to your attention.

(a) Mr. Nkumsah is majority shareholder and Chairman of the Board of Directors of Nkumsah Trading Ltd, which has an account with you for the past twenty years. The company issued debentures secured by a floating charge over the company’s assets three years ago. Mr. Nkumsah has 60% shares in the company and is also the sole signatory of the account. Nkumsah Trading Ltd. was established with a registered constitution with the objects of importing medical equipment and ancillary materials. He has applied for a loan of GHC 400,000 for the importation of baby pampers as he claims baby pampers move faster than medical equipment. In appraising the facility, your attention is drawn to the fact that since the company has incorporated with registered objects the company must amend the constitution to enable the company to undertake the new venture. In your discussion with him he asks you of advice of how he could amend the objects of the company’s constitution to enable him to enter into the new venture. He also asks you

what legal difficulties may arise if he engaged in business outside the established objects of the company. [10 Marks]

(b) Secondly Mr. Nkumsah has a cheque payable to a sister company Jamsah Ltd., in which he has shareholding of 50%. His lifelong friend owns the remaining 50%. You advise him that it is a company policy not to credit a cheque payable to a company into a personal account of a director or employee of that company. He argues with you and tells you that since he is the one of the key shareholders he has the right to do so as it is an internal arrangement for him to undertake a specified transaction for the company. [10 Marks]

[Total marks: 20]

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  • 20 Marks

PBL – OCT 2022 – L3 – Q2 – Banker-Customer Confidentiality and Law Enforcement Demands

Scenario involving police demanding customer account information; identify duty of confidentiality, its exceptions, and how to handle the situation.

You enter your office as Retail Manager this morning to find commotion at the front desk of your branch. As you enter you see three persons in police uniforms claiming to be from the National Investigations Bureau (NIB). They claim they have got wind that one Mr. Mahama Obeng who is under investigation for drug trafficking has an account with your branch where he has lodged his ill-gotten gains. They are demanding that your Operations Manager produce the information immediately or he would be hauled to the NIB for impeding an investigation.

(a) What rule of law do you require to resolve this problem? [2 Marks]

(b) Discuss the four (4) exceptions to the duty a bank owes its customers identified in (a) [8 Marks]
(c) How would you deal with the situation that is before you?[10 Marks]

[Total marks: 20]

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  • 20 Marks

ITF – OCT 2022 – L3 – Q8 – Remedies to Fraud in International Contracts

State five remedies to fraud in international contracts based on a copper blister fraud case.

During the summer of 2020, Geneva-based Mercuria Energy Group said it had been the victim of cargo fraud following its purchase of 10,000 tons of copper blister. When the cargoes started arriving in China, it found containers full of painted stones instead. The bizarre case happened despite security and inspection controls. About 6,000 tons were loaded for shipment in more than 300 containers on eight vessels. But before its journey from a port near Istanbul, the copper was switched with paving stones, spray-painted to resemble the semi-refined metal. Once the vessels were at sea, Mercuria paid $36m over five installments. The fraud wasn’t discovered until the ships began arriving in the Chinese port of Lianyungang. Mercuria, one of the five-biggest energy traders in the world, is seeking redress in Turkish and UK courts against the copper supplier, Bietsan Bakir. Turkish police have taken a number of people into custody in relation to the fake copper scheme. “Suspects have been taken under custody who are thought to be involved in the various parts of this organised crime against Mercuria,” the company said in a statement while thanking the Istanbul Financial Crimes Department.

Note: All parties in all commercial transactions should be aware of the potential for fraud. In some cases, those parties you negotiate with may not even be aware of the liability they pose. The above fraud case gained global attention through social media on March 9, 2021.

REQUIRED

State five (5) remedies to fraud in international contracts.

[Total Marks 20]

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  • 20 Marks

ITF – OCT 2022 – L3 – Q7 – Role of Banks in International Trade

List the roles of banks in international trade in bullet points for SMEs under AfCFTA.

The African Continental Free Trade Area (AfCFTA) is organizing training programs to grow the Small and Medium-sized Enterprises (SMEs) and most importantly to deepen their understanding on international trade and how they can take advantage of the banking system for efficient operation and expansion of their businesses. As Head of Trade Finance of your bank, you have been engaged as a resource person by (AfCFTA) to take Chief Operating Officers of these SMEs on the following topic: “The Role of Banks in International Trade”

REQUIRED:

List these roles (in bullet points only) under the various roles for one mark each.

Note: Long and detailed descriptions are not required.

[Total marks 20]

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  • 20 Marks

ITF – OCT 2022 – L3 – Q6 – Issuing Bank’s Undertaking under UCP 600 Article 7

State the issuing bank's undertaking as per UCP 600 Article 7 a (i-v), b, and c.

State the “Issuing Bank’s Undertaking” as enshrined in Article 7 a (i – v), b and c when it issues a credit on behalf of its customer under the current International Chamber of Commerce (ICC) Publication in respect of Uniform Customs and Practice for Documentary Credit – UCP 600.

[Total Marks 20]

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  • 20 Marks

ITF – OCT 2022 – L3 – Q5 – D/A Collections and Buyer Protection

Explain D/A terms, expected instructions on collection order, address suggestion on refusing non-spec goods, and ways for drawee protection in D/A collections.

Mr. Bob Ferguson, senior director of your customer, Adelaide Ltd is negotiating for the first time with suppliers abroad to purchase some outwear garments, which are at present unobtainable in the UK. The terms of payment which the sellers have suggested are a 90 days’ sight draft D/A with presentation through a UK bank. You understand that the presentation will be subject to Uniform Rules for Collections (and the shipping terms are to be CFR UK port). Your customer believes that he will have the opportunity of examining the goods when they are received in the UK and that, if they are not in accordance with specification, he can refuse the goods and will not be liable to pay the sellers, since all charges will be against the goods.

Required

a) Write brief notes on the terms of payment mentioned above; [4 marks]

b) Indicate the instructions you would expect to see on the collection order; [8 marks]

c) What would say to the suggestion by Mr. Bob Ferguson that, if goods were not in accordance with specification, the company could refuse to take up and pay for them? [6 marks]

d) How can the drawee obtain a measure of protection with D/A collections? [2 marks] [Total Marks 20]

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  • 20 Marks

ITF – OCT 2022 – L3 – Q4 – Back-to-Back Credits for Import Financing and Cash Flow

Describe back-to-back credits to protect the customer and assist cash flow, assess appropriateness for German supplier in Euros, and suggest a compromise for compliance.

Builders Merchants Ltd, customers of your bank, supply the building construction industry with a wide range of building materials and products. Their Financial Director, Mr. Kwame Annoh, calls to see you to discuss a CIF contract, which has been signed, to supply a range of fittings and building materials to an overseas buyer. During the conversation you discover that all the goods will be bought from overseas and that all the suppliers are insisting upon secured methods of payment. The Financial Director asks you to suggest a method by which his company can be fully protected, since cash flow considerations are causing some concerns at the present time. The overseas CIF contract is expressed in sterling but one supplier based in Germany, is insisting upon being paid in Euros.

Required

a) A brief description of basic instrument which would be appropriate in answering the needs of the Builders Merchants Ltd. Indicate why your suggestion will cater for your customer by assisting them to overcome their cash flow difficulties and why it will also give some comfort to their potential suppliers. [12 marks]

b) State briefly whether the method described by you in (a) is or is not, appropriate to the contract with the German supplier. Give reasons for your answer. [2 marks]

c) A compromise that you would consider arranging for Builders Merchants Ltd. which would assist them in complying with the request of the German supplier, bearing in mind that the German company requires security of payment.

[6 marks] [Total Marks 20]

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  • 20 Marks

PBL – OCT 2022 – L3 – Q7 – Legal Mortgage over Leasehold Interest

Outline key considerations for taking a legal mortgage over leasehold property and steps to perfect it for a sole proprietorship loan.

Amoasi Enterprise is a sole proprietorship owned and controlled by John Amoasi. The business is engaged in the supply of chips and stones for building projects. John Amoasi has applied for a loan of GHC 500,000 for the purchase of a used tipper truck. He shows you an Indenture covering his Leasehold interest in a property located a Winneba valued GHC 1,000,000.00.

(a) What key consideration would you have in mind in taking a legal mortgage over a leasehold interest? [8 Marks]

(b) Outline the steps which you would take to acquire a legal mortgage over the property in such a manner that the bank’s interest is absolutely protected. [12 Marks]

[Total marks:20]

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  • 20 Marks

PBL – OCT 2022 – L3 – Q6 – Alternative Securities for Construction Loans and Lender Remedies

Identify alternative security for a construction loan where traditional assets are unsuitable, and outline steps to perfect it; list key remedies under the Borrowers and Lenders Act 2020 for borrower default.

(a) Your key customer BBA Construction Ltd. is engaged in a contract for the construction of a 200 kilometer road in the Central Region. He has completed over 60 % of the project and has certified works of GHC 800,000 to be paid. He is applying for working capital loan of GHC 500,000 to purchase materials for the project.

He has no security to offer save the assets of the company which comprise a one storey office building and the road construction equipment. Your managing director is not enthused about taking a fixed and floating charge over the assets of the company as they are subject to rapid wear and tear. The key person Mr. Aras also does not have any personal landed property to offer.

From the above, identify what alternative security may be available in the circumstances and how you would proceed to take the security to ensure that the bank’s interest is protected. [16 Marks]

(b) You have been asked to deliver a lecture on the remedies of a lender in the event of a borrower defaulting in the servicing of a facility. Mention the four key remedies provided under the Borrowers and Lenders Act (2020) Act 1052. [4 Marks]

[Total marks:20]

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  • 20 Marks

POB – LP OCT 2022 – L3 – Q4 – Collecting Bank Duties and Protections in Cheque Collection

A bank collects a stolen cheque for a fraudulent customer, opens an account after clearance, allows withdrawal, and faces a lawsuit from the drawer; questions cover definition of collecting bank, duties, statutory protections, common law defences, and applicability of protection.

As a new Manager at the Edubiase branch of your bank, in the course of your work, your branch has collected a cheque for the account of a customer who turned out not to be the true owner of the cheque. Your Operations Manager did not open the account straightaway but for reasons unknown to you, he told the customer Timothy Ankrah that the bank would not open the account immediately but would only open the account if the cheque of GHC 500,000 the prospective account holder presented was cleared. After the cheque had cleared, your Operations Manager proceeded to open the account and the very next day, Timothy withdrew an amount of GHC 400,000.00 which he claimed was for the purchase of a car.

It transpires that the cheque had been stolen and Timothy was only an impersonator. Timothy is nowhere to be found.

The drawer of the cheque Mr. Banson has sued the bank for refund of the monies he has lost.

(a) What is a collecting bank? [2 Marks]

(b) Mention three duties of a collecting bank. [3 Marks]

(c) Mention and explain the statutory protection available to a collecting bank that collects a cheque for a party who is not the true owner of the cheque? [9 Marks] (d) What are the common law defences available to a collecting bank? [4 Marks]

(e) Will the bank be able to avail itself of the statutory protection? [2 Marks]

[Total marks:20]

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  • 20 Marks

PBL – OCT 2022 – L3 – Q3 – Company Objects Amendment and Cheque Handling Policies

Legal principles for advising on amending company objects for new business ventures and handling a cheque payable to a related company for crediting to a personal account.

State the legal principles you would take into consideration in resolving the following legal matters that have come to your attention.

(a) Mr. Nkumsah is majority shareholder and Chairman of the Board of Directors of Nkumsah Trading Ltd, which has an account with you for the past twenty years. The company issued debentures secured by a floating charge over the company’s assets three years ago. Mr. Nkumsah has 60% shares in the company and is also the sole signatory of the account. Nkumsah Trading Ltd. was established with a registered constitution with the objects of importing medical equipment and ancillary materials. He has applied for a loan of GHC 400,000 for the importation of baby pampers as he claims baby pampers move faster than medical equipment. In appraising the facility, your attention is drawn to the fact that since the company has incorporated with registered objects the company must amend the constitution to enable the company to undertake the new venture. In your discussion with him he asks you of advice of how he could amend the objects of the company’s constitution to enable him to enter into the new venture. He also asks you

what legal difficulties may arise if he engaged in business outside the established objects of the company. [10 Marks]

(b) Secondly Mr. Nkumsah has a cheque payable to a sister company Jamsah Ltd., in which he has shareholding of 50%. His lifelong friend owns the remaining 50%. You advise him that it is a company policy not to credit a cheque payable to a company into a personal account of a director or employee of that company. He argues with you and tells you that since he is the one of the key shareholders he has the right to do so as it is an internal arrangement for him to undertake a specified transaction for the company. [10 Marks]

[Total marks: 20]

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  • 20 Marks

PBL – OCT 2022 – L3 – Q2 – Banker-Customer Confidentiality and Law Enforcement Demands

Scenario involving police demanding customer account information; identify duty of confidentiality, its exceptions, and how to handle the situation.

You enter your office as Retail Manager this morning to find commotion at the front desk of your branch. As you enter you see three persons in police uniforms claiming to be from the National Investigations Bureau (NIB). They claim they have got wind that one Mr. Mahama Obeng who is under investigation for drug trafficking has an account with your branch where he has lodged his ill-gotten gains. They are demanding that your Operations Manager produce the information immediately or he would be hauled to the NIB for impeding an investigation.

(a) What rule of law do you require to resolve this problem? [2 Marks]

(b) Discuss the four (4) exceptions to the duty a bank owes its customers identified in (a) [8 Marks]
(c) How would you deal with the situation that is before you?[10 Marks]

[Total marks: 20]

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  • 20 Marks

ITF – OCT 2022 – L3 – Q8 – Remedies to Fraud in International Contracts

State five remedies to fraud in international contracts based on a copper blister fraud case.

During the summer of 2020, Geneva-based Mercuria Energy Group said it had been the victim of cargo fraud following its purchase of 10,000 tons of copper blister. When the cargoes started arriving in China, it found containers full of painted stones instead. The bizarre case happened despite security and inspection controls. About 6,000 tons were loaded for shipment in more than 300 containers on eight vessels. But before its journey from a port near Istanbul, the copper was switched with paving stones, spray-painted to resemble the semi-refined metal. Once the vessels were at sea, Mercuria paid $36m over five installments. The fraud wasn’t discovered until the ships began arriving in the Chinese port of Lianyungang. Mercuria, one of the five-biggest energy traders in the world, is seeking redress in Turkish and UK courts against the copper supplier, Bietsan Bakir. Turkish police have taken a number of people into custody in relation to the fake copper scheme. “Suspects have been taken under custody who are thought to be involved in the various parts of this organised crime against Mercuria,” the company said in a statement while thanking the Istanbul Financial Crimes Department.

Note: All parties in all commercial transactions should be aware of the potential for fraud. In some cases, those parties you negotiate with may not even be aware of the liability they pose. The above fraud case gained global attention through social media on March 9, 2021.

REQUIRED

State five (5) remedies to fraud in international contracts.

[Total Marks 20]

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  • 20 Marks

ITF – OCT 2022 – L3 – Q7 – Role of Banks in International Trade

List the roles of banks in international trade in bullet points for SMEs under AfCFTA.

The African Continental Free Trade Area (AfCFTA) is organizing training programs to grow the Small and Medium-sized Enterprises (SMEs) and most importantly to deepen their understanding on international trade and how they can take advantage of the banking system for efficient operation and expansion of their businesses. As Head of Trade Finance of your bank, you have been engaged as a resource person by (AfCFTA) to take Chief Operating Officers of these SMEs on the following topic: “The Role of Banks in International Trade”

REQUIRED:

List these roles (in bullet points only) under the various roles for one mark each.

Note: Long and detailed descriptions are not required.

[Total marks 20]

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  • 20 Marks

ITF – OCT 2022 – L3 – Q6 – Issuing Bank’s Undertaking under UCP 600 Article 7

State the issuing bank's undertaking as per UCP 600 Article 7 a (i-v), b, and c.

State the “Issuing Bank’s Undertaking” as enshrined in Article 7 a (i – v), b and c when it issues a credit on behalf of its customer under the current International Chamber of Commerce (ICC) Publication in respect of Uniform Customs and Practice for Documentary Credit – UCP 600.

[Total Marks 20]

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  • 20 Marks

ITF – OCT 2022 – L3 – Q5 – D/A Collections and Buyer Protection

Explain D/A terms, expected instructions on collection order, address suggestion on refusing non-spec goods, and ways for drawee protection in D/A collections.

Mr. Bob Ferguson, senior director of your customer, Adelaide Ltd is negotiating for the first time with suppliers abroad to purchase some outwear garments, which are at present unobtainable in the UK. The terms of payment which the sellers have suggested are a 90 days’ sight draft D/A with presentation through a UK bank. You understand that the presentation will be subject to Uniform Rules for Collections (and the shipping terms are to be CFR UK port). Your customer believes that he will have the opportunity of examining the goods when they are received in the UK and that, if they are not in accordance with specification, he can refuse the goods and will not be liable to pay the sellers, since all charges will be against the goods.

Required

a) Write brief notes on the terms of payment mentioned above; [4 marks]

b) Indicate the instructions you would expect to see on the collection order; [8 marks]

c) What would say to the suggestion by Mr. Bob Ferguson that, if goods were not in accordance with specification, the company could refuse to take up and pay for them? [6 marks]

d) How can the drawee obtain a measure of protection with D/A collections? [2 marks] [Total Marks 20]

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  • 20 Marks

ITF – OCT 2022 – L3 – Q4 – Back-to-Back Credits for Import Financing and Cash Flow

Describe back-to-back credits to protect the customer and assist cash flow, assess appropriateness for German supplier in Euros, and suggest a compromise for compliance.

Builders Merchants Ltd, customers of your bank, supply the building construction industry with a wide range of building materials and products. Their Financial Director, Mr. Kwame Annoh, calls to see you to discuss a CIF contract, which has been signed, to supply a range of fittings and building materials to an overseas buyer. During the conversation you discover that all the goods will be bought from overseas and that all the suppliers are insisting upon secured methods of payment. The Financial Director asks you to suggest a method by which his company can be fully protected, since cash flow considerations are causing some concerns at the present time. The overseas CIF contract is expressed in sterling but one supplier based in Germany, is insisting upon being paid in Euros.

Required

a) A brief description of basic instrument which would be appropriate in answering the needs of the Builders Merchants Ltd. Indicate why your suggestion will cater for your customer by assisting them to overcome their cash flow difficulties and why it will also give some comfort to their potential suppliers. [12 marks]

b) State briefly whether the method described by you in (a) is or is not, appropriate to the contract with the German supplier. Give reasons for your answer. [2 marks]

c) A compromise that you would consider arranging for Builders Merchants Ltd. which would assist them in complying with the request of the German supplier, bearing in mind that the German company requires security of payment.

[6 marks] [Total Marks 20]

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