If the supplier has offered or issued a PSI (Pre-Shipment Inspection) quantity and quality, the supplier bears that cost. If the buyer wants his own inspection agency to do the inspection, then the buyer will bear the cost as per agreement contract.
Note: A SGS certificate cannot be forged. The SGS will authentic the certificate from their eDocumentauthentication
https://sgsonsite.sgs.com/en/v2/common/ecertificate/authenticateeCertificate.jsp
board ship mate’s receipt, signed by the ship’s master or ship’s owner. This shows the goods are on
board the buyer’s vessel. However you cannot be sure which document will be available first, therefore it is advised to add a condition in the agreement contract to allow a different document to be used as a primary evidence that the goods are on board the named vessel. An acceptable presentation document that can be used as a primary document is a non-negotiable waybill that is produced by a forwarder’s agent of the shipowner or master. A forwarder’s receipt can also be a leading delivery document for presentation. These documents prove the product is on board the buyers vessel. The PSI is first class evidence that the product exist.
Note: In an FOB contract.
The Marine BOL (Bill of Laden) is not required to be secured by the intermediary unless the buyer
specifically asks the intermediary to do so. In such an event the leading delivery document on an FOB deal is the FCR, (forwarders certificate of receipt) Ship’s mate’s receipts or sellers invoice. Not necessarily in that order.
Note: Intermediaries MUST learn trade for FOB deals until they get experience to trade on the more complicated CIF/CIP deal.
remains with the buyer.The Certificate of Origin is an import document not an export document.
Each intermediary has their own commission agreement contract with the controlling intermediary. If
there are 10 intermediaries in the chain then there are 10 individual commission agreement contracts with the controlling intermediary. If there are too many intermediaries in the deal, the situation is handle like this.
Lets say there are 20 intermediaries on the buyers side and 10 intermediaries on the sellers side and each side will be paid 10 cents a barrel of 4 million barrels. That would be $400,000 for each side. The controlling intermediary will appoint one intermediary on each side to disburse the commission for their side. This leaves the controlling intermediary with only having to pay commission to one person on each side. Which would be $400.000 for each side. It would be the duty of the appointed intermediaries to have a written agreement with all the other intermediaries for their commission.
This system stops an intermediary in a chain from claiming his brother, sister and uncle are entitled to a claim of the commission as it would be voted out by the group of intermediaries on that side. The controlling intermediary will keep the 2 appointed intermediaries transparent and in the loop of the deal and it is the duty of the appointed intermediaries to keep the other intermediaries informed.
The reason for individual agreement, is for the protection of the individual intermediary in a chain deal.
If all 20 people are listed in one commission agreement and one of the listed people are not entitled to the commission and removed from that agreement for what ever reason that commission agreement contract become invalid which leaves everyone else on that agreement without a legal claim for their commission. This is why the NCND/IMFPA flawed documents are of no protection what so ever. There are legal documents that will protect the intermediaries and his commission but the NCND/IMFPA is not one of them.
https://sgsonsite.sgs.com/en/v2/common/ecertificate/authenticateeCertificate.jsp
certificate as defined on contract. Providing all the detail of the supplier.
secures the vessel. Even though the vessel is ordered by the supplier the buyer is still response for the cost of vessel which is on the suppliers invoice.
NO, a Performance Guarantee does not activate the L/C and NO, activation of the L/C does not mean money. I will explain.
A Bank Performance Guarantee is issued in the form of a Stand by Letter of Credit defined by and
subject to the rules of ISP98 (International Standby Practice) by the suppliers bank as a guarantee of delivery to the buyers bank. This is a complete separate entity to the Pre Advised Documentary Letter of Credit.
The Pre Advised Transferable Documentary Letter of Credit is issued by a prime Top World
Bank Per UCP600 banking laws by the buyer for purchase of goods and is activated only when the Pre Advise conditions are met. The conditions in the Pre Advise L/C is not the Performance Guarantee.
Activation of a letter of credit is not money in the suppliers bank account. Activation of the L/C means the buyer who issued the L/C can not change his mind and void the Letter of Credit unless fraud is proven. The active Letter of Credit turns into money only when the delivery documents are presented to the bank and the end buyer.
The L/C is always issued first by the buyer and the Bank Performance Guarantee is issued by the supplier second.
Note: Sometimes instead of a Bank Guarantee the supplier offers a “LDD” (Late Delivery Discount)
applied as a credit of XX% to favor of the end buyer on the Sellers invoice if delivery fails to be made on time. The buyer sometimes sees the “LDD” as the favorable choice of delivery guarantee as the % value offered on the LDD is higher then the % value of the SLC.
The end buyer applies for a “TDLC” to pay for purchased goods to you the “controlling buyer/seller
intermediary” as the beneficiary. The Transferable Letter of Credit is not transferred to your account, it is issued as a Transferable DLC by the end buyer’s bank to your bank account. You being the
beneficiary of the TDLC can transfer the said amount of suppliers invoice to the suppliers bank. This is one transfer. The balance of the TDLC is left in your account as commission for you and the other
intermediary who assisted you on BOTH SIDES. Once it is transferred to the suppliers bank it cannot be transferred again. One transfer only.
Note: The transferable DLC may be transferred to more then one supplier but can only be transferred once. Eg. One supplier get 25% of the TDLC and another supplier gets 50% of the same TDLC but once transferred to the suppliers it cannot be transferred again.
NNPC/JVC stands for- Nigeria National Petroleum Company / Joint Venture Company. NNPC/JVC isoften seen on a fraudulent Sales and Purchase Agreement asking for banking information. The NNPC is in joint venture with many companies like Shell, Mobil, Elf, Chevron, Texaco, Agrif which means they are doing business with these companies. The NNPC are not in partnership with these companies. The NNPC cannot offer a sales and purchase agreement to any intermediary, company or anyone implying that the companies they are doing business with is part of a sales and purchase agreement. Anyone offering such a sales and purchase agreement does not have oil or even access to it.
If the NNPC and Shell or Mobel or any other company are involved in any sales and purchase
agreement with a principal buyer (which is very doubtful) it has to be specifically stated on the sales and purchase agreement. No Sales and Purchase Agreement can be generic as being offered on the Internet.
PB:
This stand for Performance Bond. The PB is a guarantee that follows the goods to the destination
port in where if the goods can be rejected for good reason, then applying on the collection of P.B
supported by a B.G. Both the Performance Guarantee and the Performance Bond are “based” on
performance yet both are different type of performance assurance. A Performance Bond is for a DES deal that works for the supplier in possession of goods and an end buyer taking possession of goods. The delivery of title documents cannot be secured so an intermediary is not to enter in such
deals.
PG:
A Performance Guarantee is a guarantee given by the seller’s bank to the buyers bank in the form of an unconditional Stand-By letter of Credit. If the delivery fails and the delivery documents are not
presented to the bank on the date specified in the contract, the bank just automatically pays buyer bank the Performance Guarantee unconditionally, No questions asked.
So the Intermediary must ask the seller to issue a Performance Guarantee (PG) of XX% (Not a
Performance Bond) of the total cost as defined in contract, issued as unconditional as per Stand-by
Letter of Credit procedures defined under UCP600 banking rules, issued with in 3 days of buyers L/C being transferred. This guarantee ends when delivery documents is presented to bank.
provided they are based in different countries. If a bank in London England issues a Letter of Credit, its branch in Manchester England cannot confirm it as they are both in the same county and therefore are considered to be the same bank. If the same bank in London England issues a letter of credit and its office in Dubai were requested to add its confirmation then this is acceptable under UCP600 Article 3 (but not necessarily acceptable to the beneficiary) as the branches are in different countries.
Yes, there is a difference between the End Buyers RFQ and the Buyer/Sellers RFQ.
The RFQ from the End Buyer to the Buyer/Seller is a request for a quote to buy the product. The RFQ from the Buyer/Seller to the Supplier is a request for a quote to sell the Suppliers product. This is why a intermediary can not give a “ICPO” to a supplier. The intermediary is not purchasing the product. Only the person who is taking possession of the goods is purchasing the product. The intermediary only takes possession of the Title not the product. The intermediary deals in documents only not the product itself. The “Quote from the Supplier is the first most important document. Without a quote from a real supplier you have nothing to start a deal. Supplier first, the buyer 2nd.
Here is a small example of a RFQ transaction:… Your neighbor Joe has a sports car in his driveway for sale and you say to him (“Hey Joe how much do you want for your sports car I think I know someone who might want it.) You have just requested for quote from Joe to sell the car, not to buy. Now you advertise that sports car and a potential buyer ask, how much for the car. The buyer request for quote to buy. See more on ICPO and RFQ… Question #1
obtained from the supplier or you offer no “P.G.” to the end buyer even though you still get the “P.G.”
from the supplier.
Not understanding why the supplier needs to be secured first can get an intermediary in a lot of trouble.
If an end buyer issues a DLC (Documentary Letter of Credit) to your account (the controlling
intermediary) under the impression that you have a supplier (because of quotes you received from
another intermediary seller) and the intermediary seller really did not have a supplier then you can and will be charged on fraud. The end buyer went through an expense setting up the DLC and in return was defrauded by you. It is without say, you are in a serious situation.
Intermediary often are not fully aware of the cost involved for a buyer opening a Letter of Credit.
Fees forLetter of Credit
(#1) Secure the supplier first, find the buyer second. Once you get a quote from the person who is in
actual possession of the product (supplier) than seek the buyer.
Internationally this document floating around the Internet is impossible to enforce in a court of law.
No.
A mandate to a supplier is an “agent” who acts on behalf of a disclosed principal. A mandate is not just given to a person; (as implied so often). It has to be earned, after a strong relationship has been built from many years of dealing with a “principle supplier”. The mandate agent can only act under the instructions of their principle (supplier) who must disclose to end buyer immediately when the offer is made to a end buyer and in closing the deal the “mandate agent” would be paid a very “small sum” by the supplier is often the end result. The mandate agent gets no commission from the buyer’s side of the deal.
A mandate agent has to close many deals in order to get any reasonable commission amount from the supplier. Many intermediaries claim mandate-ship because they think being next to the supplier as amandate agent is putting them in a great position. This is incorrect. An intermediary in a chain deal will make a great deal more money than a mandate agent.
The best position in a deal is the “controlling buyer/seller intermediary”. The buyer/sell must know
procedures really well and act in the best interest of all parities on both sides of the deal.
Forget about becoming a mandate holder of a principal as it is not a feasible position to hold if you are looking to make the big money. Learn the proper procedures, rules and policies and become the legally defined Buyer/seller.
numbers indicates one of the many standardized message formats which comprise the SWIFT
messaging system. These type of payment are internal bank applications for transferring money-
Intermediaries cannot use such applications. When a bank issues an MT 760 it practically issues a payment guarantee, on behalf of a customer, typically having first blocked the same amount of funds in the customer’s account. Impossible incorrect flawed applications. Intermediaries can only use Non cumulative revolving UCP600 Bank issued Irrevocable Documentary Letter of Credits
(PA IDLC) when attempting to close deal.
the paper it is written on. If you have your name on this document and get circumvented, do you have hundreds of thousands of dollars to pay to take this through the international courts. This is a document that is very hard to enforce. Only a misinformed or unskilled intermediary/broker would send you a NCNDA.
IMFPA stands for (Irrevocable Master Fee Protection Agreement.) The FPA (Fee Protection Agreement) and NCND are usually attached to each other. FPA / NCND is not the proper way to protect intermediary/broker’s interests.
Note: Beware if someone claims to be the Mandate, Supplier, End Buyer while at the same time requesting FPA and NCND. A real mandate never fears circumvention as he is protected by the one who extended the mandate to him. A real supplier and a real End Buyer don’t get commission.
This stands for Bank Comfort Letter. It is a letter provided by the buyer’s bank to confirm that the buyer has sufficient funds to carry out the transaction. This is not a guarantee that the end buyer is going to buy.
Intermediaries often ask for a BLC in their procedures when they should be asking for acceptance of your “Offer”. Why would an end buyer want to disclose all his financial banking information to an intermediary over the Internet he does not know just because they request it. This is not a guarantee that the end buyer is going to buy.
Even if the end buyer did give a BCL what is the intermediary going to do with it. It’s not like the intermediary can conduct a soft probe. If his intent is to pass this information on to the supplier then he has a problem. The end buyer has been disclosed and all the intermediaries involved in the deal have all been circumvented. An intermediary cannot deal with a BCL.
Remember the end buyer and the suppliers have nothing to do with the commission. The commission comes from the difference between the buying price and the selling price that is controlled by the controlling intermediary. (The person who pays the commission)
The BCL may apply to a direct end buyer doing business with a genuine Supplier on some occasion but cannot simply be applied when a intermediary such as a controlling intermediary is involved.
example the CIF (Cost Insurance and Freight) price to ship sugar from Brazil to South Africa is 5,000 miles and from Brazil to China would be double. This could make it over half a million dollars price difference. No buyer would be willing to pay extra just to get a “easily” quoted CIF ASWP price.
suppliers premises. “e.g. EXW Tampa Florida.” This means the supplier has sold off the warehouse floor and at warehouse prices. The buyer makes the arrangements to have it picked up from the warehouse or another place. (Where ever the supplier says the product will be. The Supplier or Buyer/seller only have to provide the goods as per contract at a designated place and nothing more. The contracted driver gives a pickup receipt to supplier and it is this receipt that allows the supplier to collect on the DLC .If the buyer/seller or supplier is going to deliver the goods to the dock, then that’s not ex works but FAS (free along side ship) The price would now be higher.
P.O.P as often seen on the Internet to define (Proof of Product).
There is no genuine POP (Proof of Product) capability and should be correctly defined as (the evidence of supplier in possession of goods being sold) under FOB/CIF delivery rules. Even if you go and look at the goods, and take a picture, this is only proof that you saw the goods. It does not mean that this is the goods that will be shipped to the buyer. The goods you looked at today could be sold the next day to someone else. The only real proof that the product exist is after delivery to the carrier/vessel with a Bill of Lading and a SGS certificate. A SGS certificate can not be forged as it only takes one phonecall to authenticate it.
A Proof of Product (‘POP’) is often requested by buyers or intermediaries who believe it will give them some guarantee of the existence of the product and ability of the supplier to deliver. Many POPs produced are fake. The POP offers no proof at all, because once a POP has been drafted it is automatically out of date. The product could have been sold to another buyer and no longer exists.
If an end Buyer were dealing with a supplier anything can be suggested especially in matters of POP.
But no matter what the End buyer demands, he will still need to produce the financial instrument to pay for the goods FIRST before a supplier will even consider making any effort in getting goods ready for delivery. The money must come first- When an end buyer ask a buyer/seller he need a POP before financial instrument is in place, he is really saying: Please tell me who your disclosed principal is so I can circumvent you.
POP really does not really give any proof, but it will give the opportunity for curmvention.
The buyer is being very inventive. (suppliers hate this). The buyer may be looking to reject the goods even if they are perfectly match the shipped goods. This can easily happen. Any sample given overrides any specs in the contracts. In other words, if the goods arrive different even just a little from the sample, the goods can be rejected at port. A buyer could create this problem to get the goods at a lower price.
The buyer knows what they want. SGS does the analytical inspection of the goods and advises exactly what is being shipped. The safest way to go is No Samples.
(DLC) Documentary Letter of Credit is a type of financial instrument used to pay for goods being ordered. The DLC has terms and conditions applied. The end buyer issues a DLC to supplier and if all conditions are met by the intermediary and the supplier the supplier can obtain collection of funds. By default a DLC becomes a irrevocable Letter of Credit.
Note: When an intermediary is involved there are conditions the intermediary must meet before the DLC becomes active. When this condition is met (Evidence of supplier in possession of goods) the
intermediary can then transfer the DLC to the supplier.The supplier will meet the conditions of delivery documents and then apply for collection.
Flawed Terms for Intermediary
LOI: This term is used out on the Internet by inexperience traders as a “Letter of Intent” which is
incorrect. LOI mean “Letter of Indemnity.”Inexperience “intermediary seller” who is claiming to be the supplier will ask for a “Letter of Intent” to purchase goods. You as an intermediary can not give a letter of intent to buy goods as your intentions are not to buy goods but to sell the “Title” of the goods. So your letter of intent to buy goods would be a lie. Giving a Letter of Intent only means “Yes I intent to buy the goods but I can change my mind anytime. A letter of Intent is not a binding contract. The Letter of Intent is a total waste of time on a worthless piece of paper. An intermediary can only give to the supplier an “Offer” which is to SELL the Title of the suppliers goods.
ICPO: This term mean Irrevocable Corporate Purchase Offer. This term will not work for the
intermediary.The ICPO is a misued term by intermediaries. The intermediary is not the corporation purchasingthe goods so he can not issue a ICPO. This term may be effective for the End Buyer to theSupplier but not for an Intermediary. The ICPO is used in local or interstate trade, particularly in theUSA. A ICPO must also be backed by assets. If an end buyer issues a ICPO and then attempts
to cancel the obligations a week later, the supplier could claim breach of contract, as the ICPO is
a binding contract. The supplier will only accept an ICPO from a corporation with assets. An
intermediary cannot and must not issue or request a ICPO as in doing so they are putting themselvesin a fraudulent position. As an Intermediary, different applications apply. ICPO’s are only used ininternational trade between large corporations and where one corporation has a subsidiary office inanother country outside the USA.
Once again an intermediary can not “irrevocably offer to purchase” the goods when they are not
purchasing. They are offering to sell the “Title” to the said goods, not purchase and take possession of goods. If any intermediary offers you an ICPO you know they are inexperience or trying to scam you. Only the end buyer can offer such a document.
The intermediary should first ask the supplier for a “RFQ” (Request for Quote) not issue a (LOI). The
next document is an “Offer” for you as a “buyer/seller intermediary” to consider from the supplier (“Offer to Sell”) Not (ICPO). This is all that is needed (Quote, Offer)
Not understanding the proper procedures and documents for an intermediary one of two things will happen. 1. The deal will collapse, and/or 2. You as an intermediary will be circumvented. LEARN, STUDY and UNDERSTAND.
Only sometimes these flawed terms and documents will work between an end buyer and a real supplier. Not very often but sometimes, as anything can be imply between end buyer and supplier. For the intermediary these terms and documents will NEVER work.
In the International Trading business the only thing needed is a “Quote” “Offer” “Contract” “Payments” and “Delivery of goods”.