ACT PATTERN #1. On Sept. 15, Acme Inc., located in Reno, Nevada, enters into a contract with Matsui Electric Company, located in Osaka, Japan for the purchase of 75 large 200-Kilowatt Electrical Generators. The terms of the contract include C.I.F. Port of Oakland. Matsui insisted upon an irrevocable line of credit in its favor for the total contract price of $185,000. The shipping deadline in the contract for the generators is October 7. On Sept. 19, Acme applies for a letter of credit with its bank in conformance with the contract. The letter of credit requires that Matsui present the following complying documents: an on-board bill of lading, a commercial invoice, a sight draft, and a certificate of origin. Matsui's bank notifies it that the bank has a letter of credit for examination from Acme. The letter of credit requires Matsui to present the bill of lading and other required documents to Acme's bank no later than 10 days after the carrier issues the shipping documents to Matsui. Matsui delivers the generators to the M.S. Cincinnati, an ocean carrier at the Port of Osaka, and receives an ocean bill of lading.

Question 3 (1 point)

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Refer to Fact Pattern #1. In the above transaction, which party pays for the freight charges?

Question 3 options:

A)	Matsui pays the freight charges to the Port of Oakland.
B)	Acme pays the freight charges to the Port of Osaka.
C)	Matsui pays the freight charges to Reno, Nevada.
D)	Acme pays the freight charges from the Port of Osaka.

Question 4 (1 point)

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Refer to Fact Pattern #1. Which of the following must occur before Acme can take delivery of the generators after they arrive at the destination port?

Question 4 options:

A)	Acme must purchase the documents from the issuing bank using a draft.
B)	Acme must deliver complying documents to the nominated or negotiating bank.
C)	Acme must purchase the documents by presenting the letter of credit to its bank.
D)	Acme must take possession of the documents from the issuing bank by signing a promissory note.

Question 5 (1 point)

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Refer to Fact Pattern #1. Before Acme can take delivery of the goods at the Port of Oakland it:

Question 5 options:

A)	Must present the complying documents required in the letter of credit to the carrier.
B)	Must deliver the bill of lading to the carrier.
C)	Must inspect the generators for conformity.
D)	Arrange for the transportation of the goods to Reno.

Question 6 (1 point)

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Refer to Fact Pattern #1. Which of the following is required under the terms of the above contract?

Question 6 options:

A)	Acme must purchase marine insurance covering the value of the generators.
B)	Matsui must purchase marine insurance covering the value of the generators.
C)	The insurance must cover Matsui's loss if the generators are lost or damaged.
D)	Matsui may purchase marine insurance, but it is not required under the contract.

Question 7 (1 point)

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Refer to Fact Pattern #1. Suppose that when the generators arrive in Oakland, one of them is severely damaged with a large dent in the side. One of the straps holding that generator is broken. The ship went through rough seas while enroute through the Pacific ocean, which was not an uncommon occurrence. In this case, which party is primarily responsible to pay for the damage?

Question 7 options:

A)	The carrier because the cargo was not stowed correctly.
B)	The insurance company because there is an insurance policy that pays for all losses regardless of fault.
C)	Acme, because it had risk of loss and the carrier is not liable because the weather was a perils of the sea event.
D)	Matsui, because the risk of loss had passed to is.

Question 8 (1 point)

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Refer to Fact Pattern #1. Assume that the bill of lading language has the quantity and weight of the generators, but it does not state their total value. If upon arrival, there are only 68 generators on board the ship, which of the following is true?

Question 8 options:

A)	Acme is responsible for the entire loss because the risk of loss had passed to it when Matsui delivered the generators to the carrier.
B)	The carrier is only responsible for paying $500 for the loss under COGSA.
C)	The carrier must pay $3500 to Acme.
D)	The carrier must pay $3500 to Matsui.