Answered

A sales contract shows:“Total amount:USD200,000. Payment term: 20% contract value by T/T in advance and 80% contract value by inrevocable L/C at sight”. Which following opinion is NOT correct? a. The buyer has responsibility for undertaking to pay USD 160,000 to the seller. b. The seller will receive USD 40,000 first and USD 160,000 later C. The seller will present the commercial documents to the bank after shipment. d. The buyer must pay USD 40,000 to the seller by T/T before shipment.



Answer :

The correct answer is C

The seller will present the commercial documents to the bank after shipment.

Here's why:

Payment Terms Explained

According to the payment terms in the sales contract:

- 20% of the contract value (USD 40,000) is to be paid by the buyer to the seller via T/T (Telegraphic Transfer) in advance, before shipment.

- 80% of the contract value (USD 160,000) is to be paid by the buyer to the seller via an irrevocable Letter of Credit (L/C) at sight, which means the seller will be paid upon presentation of the required documents to the bank.

Responsibilities of Buyer and Seller

a. The buyer has the responsibility to pay USD 160,000 to the seller via L/C after shipment, not before.

b. The seller will receive USD 40,000 first via T/T before shipment and USD 160,000 later via L/C after shipment.

c. The seller will present the commercial documents to the bank before receiving payment, not after shipment. This statement is incorrect.

d. The buyer must pay USD 40,000 to the seller by T/T before shipment, which is correct.

In summary, the seller will present the required documents to the bank in order to receive the USD 160,000 payment via L/C, not after shipment.

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