- 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.
Question
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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