Indemnity To A Shipping Company Vs Shipping Guarantee

[shafi865]

The issuing bank of a sight documentary credit issues an indemnity to a shipping company authorising the release of goods to the importer prior to presentation of documents. Documents subsequently received are discrepant. What action MUST the issuing bank take?
1. Seek agreement from the shipping company to cancel the indemnity.
2. Send a rejection notice to the presenting bank.
3. Approach the applicant for a waiver of the discrepancies.
4. Pay the presenting bank.
Select one:
A. 2 only.
B. 4 only. Incorrect. Paying the presenting bank is correct, but cancellation of
the indemnity should also be sought.
C. 1 and 4 only.
D. 2 and 3 only.
Your answer is incorrect.
The correct answer is: 1 and 4 only.
==>Is "an indemnity to a shipping company authorising the release of goods" and ''shipping guarantee'' different ? Is there any scope to seek agreement from the shipping company to cancel the indemnity?

[picant]

Hi Pal,

Normally a shipping guarantee is issued when the bill of lading is not arrived or deemed lost etc.
The l/c applicant will ask the bank(L/c issuing bank) to word this guarantee in the way to be cancelled(or the like) against presentation of an original bill of lading, under the complete acceptance of l/c documents, as presented.
On receipt of documents, complying or discrepant, the issuing bank will withhold the bill of lading originals and present them to the shipping company against surrender of the original shipping guarantee, in the meantime inform the presenting bank that documents have been accepted and paid. So there are two actions to do, one with Shipping Company and one with presenting bank.
However these questions are very tricky, but it is necessary to test full comprehension of the matter.
Other comments appreciated
Ciao

[Tzeweeeng]

The issuing bank of a sight documentary credit issues an indemnity to a shipping company authorising the release of goods to the importer prior to presentation of documents. Documents subsequently received are discrepant. What action MUST the issuing bank take?
1. Seek agreement from the shipping company to cancel the indemnity.
2. Send a rejection notice to the presenting bank.
3. Approach the applicant for a waiver of the discrepancies.
4. Pay the presenting bank.
Select one:
A. 2 only.
B. 4 only. Incorrect. Paying the presenting bank is correct, but cancellation of
the indemnity should also be sought.
C. 1 and 4 only.
D. 2 and 3 only.
Your answer is incorrect.
The correct answer is: 1 and 4 only.
==>Is "an indemnity to a shipping company authorising the release of goods" and ''shipping guarantee'' different ? Is there any scope to seek agreement from the shipping company to cancel the indemnity?

I attempted the same question from LIBF, answer is B, 4 only.
I am baffled.