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Quiz
Question 1/101/10
The Shipping Business
The Shipping Business
The Shipping Business
A broker is fixing a parcel of a chemical which the IBC Code assigns to ship type 2. What does that classification tell him about the vessel he must find?
Select the answer:Select the answer
1 correct answer
A.
The ship may be any product tanker with segregated ballast, because tank location is only regulated for type 1 cargoes.
B.
The ship must be a single hull vessel with cargo tanks at the ship's side so that the cargo can be discharged by gravity.
C.
The ship must offer an intermediate degree of protective location and damage survival capability, with cargo tanks set inboard of the shell, and must name the product on its Certificate of Fitness.
D.
The ship needs only an oil tanker certificate, because type 2 products are treated as persistent oil for construction purposes.
Explanation: Chemical tankers are governed by the International Code for the Construction and Equipment of Ships Carrying Dangerous Chemicals in Bulk, the IBC Code, given force through SOLAS and MARPOL Annex II. The Code divides ships into three types according to the hazard the cargo presents to people and to the marine environment. The first type is reserved for the most dangerous products and demands the greatest survival capability and the greatest protective location, meaning cargo tanks set well inboard of the shell so the ship can survive extensive damage without releasing cargo. The middle type requires significant but lesser protective location and damage stability. The third type covers products of comparatively low hazard and permits the least onerous arrangement. Whatever the type, the ship must hold a Certificate of Fitness which lists precisely which products she is approved to carry, and owners, charterers and brokers must check that the intended cargo appears on that list before fixing. MARPOL Annex II pollution categories, running from the most harmful through to substances presenting no measurable hazard, then drive tank washing, prewash and discharge requirements. Underwriters and clubs rely on the ship type and the Certificate of Fitness to judge whether a proposed fixture is within the vessel's approved capability.
Right Answer: C
Quiz
Question 2/102/10
P&I Insurance History, Operation and Practice
P&I Insurance History, Operation and Practice
P&I Insurance History, Operation and Practice
A maritime historian is explaining why the British mutual hull clubs of the late eighteenth and early nineteenth centuries went into sharp decline after 1824. Which explanation is correct?
Select the answer:Select the answer
1 correct answer
A.
The Merchant Shipping Act of that period made mutual hull insurance unlawful for British registered vessels
B.
Lloyd's underwriters were forbidden to write hull risks, forcing all business into the new joint stock companies
C.
Repeal of the statutory monopoly enjoyed by the two chartered corporations opened company hull underwriting to competition, and falling market rates removed the clubs' cost advantage
D.
The clubs were dissolved by their own members because unlimited calls had been declared unenforceable by the courts
Explanation: Under legislation of 1720 only two chartered corporations, the Royal Exchange Assurance and the London Assurance, could write marine insurance as corporate bodies; individual underwriters, such as those at Lloyd's, remained free to do so, but no other company or partnership could compete. The practical result was a narrow and expensive company market, and shipowners responded by forming mutual hull clubs in which they insured one another's ships, sharing losses through calls rather than paying a market premium. These clubs were local, often organised by port or trade, and depended for their appeal on being cheaper than the restricted commercial alternative. When the monopoly was repealed in 1824 the commercial market expanded rapidly, competition drove hull rates down, and the clubs lost the price advantage that had justified their inconvenience and their unlimited liability to calls. Most hull clubs faded during the following decades. What survived was the habit of mutual organisation among shipowners, together with the machinery of calls, member directors and appointed managers. That machinery was available when a wholly different gap emerged in the mid nineteenth century, namely liabilities to third parties that hull policies did not touch, and it was reused to build the protection societies.
Right Answer: C
Quiz
Question 3/103/10
Underwriting, Loss Prevention and Claims Handling
Underwriting, Loss Prevention and Claims Handling
Underwriting, Loss Prevention and Claims Handling
A newly appointed underwriting assistant is told that all entries in an International Group club are aligned to a single common expiry, so that the whole book is rated and renewed together each year. At what point does the standard P&I policy year begin and end?
Select the answer:Select the answer
1 correct answer
A.
Noon GMT on 1 January
B.
Noon GMT on 1 July
C.
Noon GMT on 20 February
D.
Midnight local time at the ship's port of registry on 31 December
Explanation: The mutual P&I policy year runs from noon GMT on 20 February to noon GMT on the following 20 February, a convention inherited from the days when Baltic ice cleared and the northern trading season began, and now retained because it lets the whole Group renew simultaneously. The common date has practical consequences that candidates must understand. It allows a club to assess its overall financial position for the coming year, announce any general increase, obtain its own reinsurance terms and then apply individual rating to each member in a single concentrated renewal season, typically from November to February. It also permits clean transfers between clubs, since the expiring entry and the incoming entry meet exactly at the same moment with no gap or overlap in cover. Pool contributions, the Group excess loss reinsurance contract and the release call structure are all organised by policy year on the same basis. Cover incepting mid-year is normally written to expire on the next 20 February so that the ship joins the common cycle, with premium charged pro rata for the broken period. Fixed premium and charterers' entries are frequently written on the same date for administrative consistency, although they need not be.
Right Answer: C
Quiz
Question 4/104/10
People Risks
People Risks
People Risks
A flag State inspector boards a bulk carrier and reviews the seafarer employment agreements held by the master. Which statement correctly reflects the requirements of the Maritime Labour Convention 2006 relating to those agreements?
Select the answer:Select the answer
1 correct answer
A.
A seafarer employment agreement may be concluded orally provided that wages are paid monthly and the master keeps a written note of the terms agreed with each seafarer.
B.
The agreement need only be signed by the master on behalf of the shipowner, because the seafarer accepts the terms by joining the ship and drawing wages.
C.
The seafarer must have an opportunity to examine and seek advice on the agreement before signing, must hold an original signed copy, and where a collective agreement forms part of the terms a copy must be available on board.
D.
The agreement need not mention repatriation entitlements, because repatriation is governed exclusively by the national law of the flag State and not by the contract.
Explanation: The Maritime Labour Convention 2006 requires every seafarer to have a written employment agreement, signed by both the seafarer and the shipowner or the shipowner's representative, containing prescribed particulars. Those particulars include the seafarer's full name and date and place of birth, the shipowner's name and address, the place and date at which the agreement is entered into, the capacity in which the seafarer is employed, the amount of wages or the formula for calculating them, paid annual leave, health and social security protection benefits, the seafarer's entitlement to repatriation, the termination provisions including notice periods, and a reference to any applicable collective bargaining agreement. The seafarer must be given the opportunity to examine and seek advice on the terms before signing, and both parties must retain a signed original. A copy of any collective agreement incorporated into it must be available on board, and where the agreement is not in English a standard form of the agreement and the portions of the collective agreement subject to port State inspection must also be available in English, except on ships engaged only in domestic voyages. For underwriting and claims purposes these documents are the primary evidence of what the shipowner has promised, and clubs routinely call for them because the measure of a crew liability usually starts with the contractual terms.
Right Answer: C
Quiz
Question 5/105/10
Cargo Risks
Cargo Risks
Cargo Risks
A cargo receiver wants to sue the carrier under a liner bill of lading printed on a time charterer's headed form; the bill is signed "for and on behalf of the Master" by port agents and contains a demise clause. Under an English law analysis, who is most likely to be treated as the contractual carrier?
Select the answer:Select the answer
1 correct answer
A.
The time charterer, because the bill is issued on its stationery and carries its house logo and booking reference
B.
The port agent who physically signed the bill, since it acted as principal in issuing the document
C.
The registered owner or demise charterer of the vessel, because the signature is for the Master and the demise clause so provides
D.
Whichever party the receiver nominates, because a holder may elect its carrier once the goods are damaged
Explanation: Identifying the carrier matters intensely because suit must be brought against the right legal person within the one year time bar, and a mistake is usually fatal. English courts approach the question by construing the bill as a whole, giving decisive weight to the signature block: a bill signed by or for the Master is normally a shipowner's bill, while a bill signed by or for the charterer as carrier is a charterer's bill. A demise clause reinforces this by declaring that if the ship is not owned by or demise chartered to the line whose form is used, the contract takes effect as one with the owner or demise charterer, who alone is the carrier. Identity of carrier and demise clauses are not universally respected; several civil law jurisdictions treat the line named on the face of the document as carrier, or allow suit against both. Practically, both owners and charterers may face claims, which is why charterers' liability cover exists alongside owners' entry. Agents signing without qualification risk personal liability, so signatures should always state the capacity and the principal for whom they sign.
Right Answer: C
Quiz
Question 6/106/10
Collision, FFO and Pollution
Collision, FFO and Pollution
Collision, FFO and Pollution
In a crossing situation the give-way vessel failed to keep out of the way; the stand-on vessel held her course and speed until collision was inevitable and only then went hard to starboard with engines full ahead. How will a tribunal most likely treat the stand-on vessel's conduct when apportioning blame?
Select the answer:Select the answer
1 correct answer
A.
A stand-on vessel that obeys the duty to keep her course and speed can never be found at fault, so the give-way vessel must bear one hundred per cent.
B.
Any proved breach of the COLREGs by both ships results automatically in an equal fifty-fifty division of liability.
C.
She may be found partly to blame, because the rules permitted and later required her to take avoiding action once it was apparent the give-way vessel was not acting, and the causative potency of that failure is weighed in the apportionment.
D.
The give-way vessel's earlier breach is the sole effective cause, so any later fault of the stand-on vessel is disregarded.
Explanation: The steering and sailing rules of the COLREGs 1972 are the yardstick against which navigational conduct is judged, but a breach matters to apportionment only if it was causative of the collision. In a crossing situation the give-way vessel must take early and substantial action to keep well clear, while the stand-on vessel must initially keep her course and speed. That obligation is not absolute. Once it becomes apparent that the give-way vessel is not taking appropriate action, the stand-on vessel may take action by her manoeuvre alone, and when collision cannot be avoided by the give-way vessel's action alone she must take such action as will best aid to avoid collision. A stand-on vessel that holds on until the last moment and then acts ineffectively is regularly found partly to blame. Courts and tribunals weigh the blameworthiness and causative potency of each ship's faults and express the result as a percentage split, such as seventy-five twenty-five or sixty-forty. There is no automatic equal division for a two-ship fault case, no rule that the first fault in time absorbs later faults, and no immunity for a vessel merely because she was the stand-on ship.
Right Answer: C
Quiz
Question 7/107/10
Towage, Salvage, General Average and Wreck Removal
Towage, Salvage, General Average and Wreck Removal
Towage, Salvage, General Average and Wreck Removal
A handysize bulk carrier arrives at a European port and is assisted to her berth by harbour tugs engaged on the port operator's standard towage conditions. One tug girts, capsizes and damages a moored barge, and the tug owner demands an indemnity from the shipowner under those conditions. How does the shipowner's P&I cover normally respond?
Select the answer:Select the answer
1 correct answer
A.
Cover is excluded outright because the shipowner accepted an indemnity in favour of the tug owner.
B.
Cover responds only if the club approved the port's towage conditions in writing before the ship's arrival.
C.
Cover responds, because liabilities arising out of customary towage of the entered ship for the purpose of entering, leaving or manoeuvring within a port in the ordinary course of trading are covered without prior approval of the terms.
D.
Cover responds only up to the tug owner's own proportion of fault as determined by the local court.
Explanation: Club rules draw a fundamental line between customary towage and other, contractual towage. Customary towage is towage of the entered ship for the purpose of entering, leaving or manoeuvring within a port during the ordinary course of trading, and also towage that is customary for the ship's trade, such as ships that habitually trade under tow on inland waterways. Liabilities arising from such towage are covered as a matter of course, without the member having to submit the towage terms for approval. The reason is commercial reality: port and harbour towage is almost always offered on the tug operator's own standard conditions, which are heavily weighted in the tug owner's favour, and the shipowner has no practical bargaining power to change them. Clubs accept that exposure as an ordinary incident of trading. Contractual towage that is not customary, typically an ocean or delivery tow arranged specifically for that voyage, is treated quite differently and requires the terms to be approved. The distinction turns on the purpose and ordinariness of the towage, not on which party was negligent, and fault-based apportionment plays no part in deciding whether cover attaches.
Right Answer: C
Quiz
Question 8/108/10
The Shipping Business
The Shipping Business
The Shipping Business
A Capesize bulk carrier's particulars state "strengthened for heavy cargoes, holds 2, 4, 6 and 8 may be empty". What does this indicate?
Select the answer:Select the answer
1 correct answer
A.
The vessel is structurally reinforced to carry high density cargo such as iron ore in alternate holds, which concentrates weight and produces high local and hull girder loads.
B.
The vessel may only carry heavy cargo if the alternate holds are filled with water ballast to keep her on her marks.
C.
The vessel is permitted to leave holds empty solely when carrying grain, to satisfy grain stability requirements.
D.
The vessel has been converted from an ore/oil carrier and the empty holds are permanently sealed slop tanks.
Explanation: High density dry cargoes such as iron ore, bauxite and some concentrates occupy very little volume for their weight, so if they were spread evenly through every hold the ship would reach her deadweight long before the holds were full, and the resulting low centre of gravity would make her extremely stiff, with violent rolling that stresses the hull and can damage cargo securing. The usual solution is alternate hold loading, in which heavy cargo is loaded into selected holds while the others remain empty. That raises the centre of gravity and softens the roll, but it concentrates enormous weight over limited lengths of the ship, imposing severe shear forces, bending moments and local tank top loading. Vessels intended for this trade are built with heavier scantlings, stronger double bottoms and reinforced transverse bulkheads, and the approved loading patterns are recorded in the loading manual and the class notation. SOLAS Chapter XII adds further structural and survivability requirements for bulk carriers, including water ingress detection and restrictions where damage stability is inadequate. Departing from the approved loading conditions, or overloading a tank top with a grab discharge or a rapid ore pour, has caused serious structural failures, so the loading instrument and the manual are central operational documents.
Right Answer: A
Quiz
Question 9/109/10
P&I Insurance History, Operation and Practice
P&I Insurance History, Operation and Practice
P&I Insurance History, Operation and Practice
The Shipowners' Mutual Protection Society was established in 1855. Which statement best describes the risks it was created to cover?
Select the answer:Select the answer
1 correct answer
A.
Loss of or damage to the entered ship itself, in competition with the hull market
B.
Liabilities left uninsured by hull policies, in particular the uninsured quarter of collision liability and claims for loss of life and personal injury
C.
Cargo shortage and damage claims brought by bill of lading holders
D.
Freight, demurrage and defence costs arising from charterparty disputes
Explanation: Hull policies of the period paid for damage to the insured ship and, through the running down clause, only three quarters of the shipowner's liability for damage to another vessel in collision, leaving an uninsured quarter. Recovery under the hull policy was also capped by the insured value, so a heavy collision liability could exceed what the policy would pay. At the same time exposure to personal injury and death claims was growing. Legislation of 1846 had created a statutory claim for the dependants of those killed by wrongful act, and the Merchant Shipping Act 1854 both consolidated shipowners' obligations and framed limitation of liability by reference to tonnage, including liability for loss of life. Shipowners therefore faced substantial liabilities to crew, passengers and other third parties for which no market cover existed. The society founded in 1855 answered that need by extending the old hull club method of mutual sharing to liabilities rather than to property. Cargo liability was not part of the original design; it came later. Understanding this sequence explains why the modern product is described as protection first and indemnity second, and why the cover is fundamentally liability insurance sitting alongside, not replacing, hull and machinery insurance.
Right Answer: B
Quiz
Question 10/1010/10
Underwriting, Loss Prevention and Claims Handling
Underwriting, Loss Prevention and Claims Handling
Underwriting, Loss Prevention and Claims Handling
An owner decides in late January that he wishes to move his fleet to another club at the coming renewal, but his broker discovers that the period for giving notice of withdrawal under the club's rules has already expired. What is the normal consequence?
Select the answer:Select the answer
1 correct answer
A.
The entry continues automatically into the next policy year on the terms set by the club and the member remains liable for the calls for that year
B.
The member may withdraw at any time on fourteen days notice without any financial consequence
C.
The club is obliged to release the member on request because mutual insurance is voluntary in nature
D.
Withdrawal takes effect immediately and the member forfeits only the advance call already paid
Explanation: Mutual entries are continuous rather than annual contracts that lapse. Unless the member gives written notice of withdrawal within the period prescribed by the club's rules, ending a set number of days or weeks before the 20 February renewal, the entry rolls over automatically into the next policy year on whatever terms the club notifies. The notice period exists to protect the mutual: the club must know the tonnage and exposure it will carry before it finalises its own reinsurance purchase, its budget and its call structure, and a member who could leave at will after those commitments were made would shift cost onto everyone else. A member who misses the deadline is bound for a further year and remains liable for the advance call and for any supplementary or deferred call subsequently levied for that year. In practice brokers diarise the deadline carefully and often serve protective notice of withdrawal before it expires, then withdraw the notice if renewal terms prove acceptable. Clubs also hold a reciprocal right to give notice of cancellation of an entry within an equivalent timetable, and separate rules allow immediate cessation on events such as loss of class, change of ownership or non-payment of calls.
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Quiz name:ONL-151-OCT-18: Module 1: The Shipping Business
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