FACT 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 24 (1 point)

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Refer to Fact Pattern #1. Suppose that Acme took delivery of the generators and prior to unpacking the containers, stored them at their warehouse for delivery to customers who will start ordering them in November for the cold weather season. Just prior to shipping to its customers, Acme discovers that 12 of the generators do not function properly. Acme notifies Matsui immediately. Which of the following statements is true?

Question 24 options:

A)	The non-functioning generators are not fit for the purposes for which they are intended, therefore, Matsui must repair or replace them because they are nonconforming goods.
B)	The risk of loss under the CIF contract passed from Matsui to Acme when the goods were loaded onto the ship, therefore, Acme is responsible for the loss but can make a claim under the insurance policy.
C)	Matsui must replace the generators because this was a CIF contract.
D)	Acme is responsible because it did not notify Matsui of the damaged generators in a timely manner.

Question 25 (1 point)

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Refer to Fact Pattern #1. Suppose that Acme notices rust damage on the outside of several of the generators when they are offloaded from the ship in Oakland on Sept. 29. Which of the following options to remedy the problem IS NOT available to Acme:

Question 25 options:

A)	Acme may accept the goods and reduce the amount paid to Matsui.
B)	Acme may avoid the contract and notify Matsui of its fundamental breach.
C)	Matsui may repair or replace the generators by October 7.
D)	Matsui may request additional time to perform even if it might be late in so doing.
E)	All of the above are allowable remedies in the above situation.

Question 26 (1 point)

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Refer to Fact Pattern #1. Assume the goods are described on the letter of credit as "200-Kilowatt Electrical Generators." When Matsui presents the documents to the nominated bank for payment, the documents include the invoice for the goods, which has a description of the goods that states, "200 KW Electric Generators." Under the UCP 600 rules, what would be the result?

Question 26 options:

A)	Because it is clear that the descriptions are referring to the same goods, the bank would accept the documents under the functional standard of compliance rule.
B)	The documents would not be complying because the description in the invoice must exactly match that in the letter of credit under the strict standard of compliance rule.
C)	Matsui or the bank could ask Acme if it would waive the discrepancy in the descriptions on the two documents.
D)	Both A. and C. are correct.
E)	Both B. and C. are correct.