O-LevelCommerceGlobal trade7100/22 · Oct/Nov 2020 · Q416 Marks

Mrs Rana is an exporter of gold jewellery. Mr Kavah imports gold jewellery from Mrs Rana to sell in his retail store.

(a)Define imports.[1]
(b)Complete the chain of distribution for the gold jewellery. Mrs Rana Mr Kavah[2]
(c)Describe one method of communication that Mr Kavah would use to contact Mrs Rana about a necklace missing from a delivery.[2]
(d)Do airport authorities affect the importing of goods such as gold jewellery? Give reasons for your answer.[3]
(e)Mrs Rana has had jewellery stolen while it is being transported. Evaluate whether insurable interest or utmost good faith is more important for Mrs Rana when applying for insurance against this type of theft.[8]

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2020). The mark or mark type is shown in brackets.

[1] Goods or services bought from other countries / goods or services brought / transported into a country.
[1] Producer / Manufacturer / Jewellery maker
[1] Agent / broker / factor / forwarding agent / merchant
[1] Email; [1] use of computer / internet / email address / electronic / written / record / attachments
[1] Telephone / smartphone / teleconferencing; [1] direct / verbal / discussion / feedback / electronic / send a text
[1] Video call / video conferencing / skype / facetime; [1] electronic / verbal / face to face / discussion / feedback
[1] Fax; [1] written / record / electronic.
[Yes 1] airports will provide security; [1] reduces theft; [1] e.g. metal detectors / CCTV; [1] storage / keep goods; [1] warehousing; [1] to the airlines carrying the goods; [1] as well as the providing runways; [1] lifting gear / forklifts / handling equipment; [1] vans to transport the cargo; [1] allow customs authorities to operate at the airport.
[No 1] the cargo is the responsibility of the airline; [1] and the freight forwarder may be responsible for packing / despatch; [1] and customs clearance; [1] the jewellery can be inspected by the customs authorities; [1] customs duties have to be paid to the customs authority; [1] who check the amount of goods imported.
[Level 3, 7-8 marks] The candidate is able to offer a thorough evaluation of the principles of insurable interest and utmost good faith when applying for insurance against theft
[Level 2, 5-6 marks] Candidate offers a satisfactory analysis of the principles of insurable interest and / or utmost good faith when applying for insurance against theft
[Level 1, 1-4 marks] Candidate demonstrates some knowledge and understanding of insurance applied to theft of goods
Insurance against theft covers the chance of goods being stolen. Goods in transit insurance specifically covers Mrs Rana's situation.
Insurable interest: The insured needs to have a direct financial interest to receive the benefit, if there is a possibility of incurring losses. Therefore, you can only insure goods which belong to you and from which you will suffer loss. For example, Mr Kavah cannot insure goods that are still owned by Mrs Rana.
Utmost good faith: All questions on the proposal form must be answered truthfully and all relevant facts, such as the correct value of the jewellery, must be accurate so that the insurance company has all the details to enable it to calculate a correct premium. If Mrs Rana was to tell lies on the proposal form and then try to make an insurance claim, she will find the insurance policy is void.
Evaluation: Both insurance principles are important. Mrs Rana will not be able to obtain insurance in the first place without some proof of ownership of the goods, so there would be no point in her applying for it. In terms of utmost good faith, it is vital that Mrs Rana is accurate about the value of her jewellery otherwise the policy would be made void without payment of a claim/compensation and she would have wasted money on any premiums she paid.