Trade procedure
Every transaction follows the same standard steps and documents, recognised by buyers, sellers and banks.
Key documents
The documents you will see in a typical deal:
- NCNDA: a non-circumvention and non-disclosure agreement protecting all parties
- LOI: a letter of intent from the buyer setting out the requirement
- Offer: a full corporate offer from the seller with specification and price
- SPA: the sale and purchase agreement signed by buyer and seller
- Letter of credit: payment security from the buyer bank
- Inspection certificates: quality and quantity confirmed by an independent surveyor
The steps
- 1Requirement or offerA buyer tells us what it needs, or a seller gives us a specification and price.
- 2Due diligenceWe verify the seller and confirm the buyer is genuine and able to pay.
- 3NCNDA and LOIBoth sides sign a non-circumvention agreement and the buyer issues a letter of intent.
- 4Contract termsFOB or CIF pricing agreed in the sale and purchase agreement, with payment by letter of credit.
- 5Inspection and shipmentIndependent inspection before the letter of credit is opened, then loading, shipping documents and payment.
Frequently asked questions
What is the difference between FOB and CIF?
Under FOB the buyer arranges the vessel and takes risk at the load port. Under CIF the seller arranges freight and insurance to the buyer port.
Why insist on inspection before the letter of credit?
It confirms the material exists and meets the specification before the buyer commits funds, which removes most of the risk of fraudulent offers.