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Unfortunately the intermediary with no knowledge of the procedures and application that were
developed for his secure and safe trading practices will undoubtedly suffer consequences.
1. If the proper procedures for the intermediary are not followed, the deal will never close. Or even get to
the acceptance of the offer from the end buyer.
2. If an intermediary use the flawed LOI/ BCL/ ICPO/ POP/ MPA/ NCND/ PB/ ASWP documents, they
are an untrained trader that has been misguided by another unskilled and untrained trader.
The untrained intermediary trader is not seeing the problems of the flawed terms, incorrect applications
and procedures that they are using.
Note: A trader using the above flawed ambiguous procedures is investing their time on deals that
simply cannot be closed. The worst part about this is traders do not understand why it is not working
and never gets enough training to correct their trading practices.
The procedures below are for an End buyer, a buyer/seller Intermediary (who is controlling the deal) and
the Supplier the person who is in possession of the goods. These procedures here are for the
(Controlling Intermediary) who has already sourced a Supplier and an End Buyer. If there are other
intermediaries in this group, they have stepped back.
Note: A Intermediary Payment Guarantee (IPA) has been issued by the controlling intermediary to each
and every sourcing intermediary in the deal guaranteeing them their commission for assisting in the deal.
The (IPA) will stand up in a court of law internationally. The NCND/MPA will not unless the deal is done in
your country in your state in your city. Otherwise the NCND/MPA document has no value in a court of law.
The Procedures for the (Controlling Intermediary) with undisclosed principles.
(a) The (Controlling Intermediary) also known as the (buyer/seller intermediary) will RFQ
(Request for a Quote) from the Supplier on behalf of his undisclosed End Buyer for his consideration.
(b) If the Supplier accepts the RFQ, the Supplier would send to the controlling Intermediary an “Offer” to
sell his product with a quote of price, specification and a validity date.
(c) The Controlling Intermediary will on his letterhead, rewrite “Offer/Quote” from supplier and add in
commission to the price and send to End Buyer for his consideration.
(d) If End Buyer accepts the price “Offer” from the Intermediary, the End Buyer will send a “Offer to
Purchase” to the Controlling Intermediary. This is a binding commitment to the controlling intermediary
(Not to the Supplier) The controlling intermediary is the Buyer/Seller.
Note: The End Buyer can call his Offer anything he wants but to you it is just an Offer to Purchase
Note: The Controlling Intermediary is controlling two separate deals. One with the Supplier and one with
the End Buyer. So the controlling intermediary is the Buyer and the Seller.
(e) After receiving the (Offer to Purchase) from the End Buyer, the Intermediary writes
an “Offer" (Not an ICPO or CPO or anything else) to purchase on his letterhead on behalf of his
undisclosed End Buyer to the Supplier.
Note: The Intermediary can not issue a "CPO" (Corporate Purchase Offer) to the Supplier as he
is not the Corporation purchasing the product. He is only issuing an "Offer" to purchase on behalf of his
(f) If the Supplier accepts the "Offer" from the Intermediary, the Supplier would send a signed contract with
his payment request and procedures. If the payment request and procedures are not workable for the
controlling intermediary then he must negotiate until conditions fits his needs.
Note: The only payment method the controlling intermediary can deal with is a UCP600 bank issue
Pre Advise Transferable Irrevocable Documentary Letter of Credit. Any other payment out side of the
DLC is not workable for an Intermediary.
With this DLC payment method the End Buyer is protected and the Supplier is protected. If the Supplier
does not fulfill the conditions of the Pre Advise DLC, the DLC can be cancelled. If the Supplier does fulfill
the conditions of the Pre Advise DLC the End Buyer can not change his mind and cancel. The deal is
financial secured. The intermediary is assured his commission and cannot be circumvented.
(g) After receiving the final contract from the Supplier, the Intermediary would on his letterhead,
rewrite, sign using the same procedures of the Supplier (changing the buying price to the selling price)
and send his contract to End Buyer for his signature.
Please remember the commission has nothing to do with the End Buyer or the Supplier. Commission is
the difference between the buying price and the selling price. It has all to do with the Controlling
Note: The Controlling Intermediary has a binding contract from the End Buyer and now a binding
contract from the Supplier.
(h) The End Buyer signs the contract and sends it back to the Intermediary. The End Buyer has
7 days to place the DLC into Intermediary bank account.
Note: It cost very little to apply and place a DLC in the Intermediary account. The large cost of the
DLC is when it is being transferred from the Intermediary's account to the Suppliers account. It is
important that the Intermediary ask for a UCP600 instrument to be applied on contract and that all
bank charges and transfer/handling fee’s are for the account of the End Buyer.
Note: ICC Uniform Custom and Practice for Documentary Credit (UCP600) Article 38 (c) state:
Unless otherwise agreed at the time of transfer, all charges (such as commission, fees, cost of
expenses) incurred in respect of a transfer must be paid by the first beneficiary (the Controlling
Intermediary is the first beneficiary of the DLC).
(i) After the UCP600 DLC is placed in the bank account of the Intermediary, the Intermediary signs
and sends back the contract he received from the Supplier to the Supplier and transfers the DLC.
Note: The controlling intermediary does not sign and send back the contract to the Supplier until the
DLC is in his account and activated.
Note: One of the conditions of the Pre Advise, must be met by the Controlling Intermediary to active the
DLC is (evidence of Supplier in possession of goods). Once the Controlling Intermediary provides all
information of Supplier in possession of the goods to the bank the DLC is activated. The End Buyer can
now verify the agreement the Controlling Intermediary has with the Supplier and the existence of the
goods. The DLC for the price quoted by the Supplier can be transferred from the Intermediary's account
to the Suppliers account. (The balance of the DLC is left in the Controlling Intermediary's account for
commission for himself and the other intermediaries who assisted with the deal.)
Note: The DLC does not become money until the balance of the Pre Advise conditions are met by the
(j) The Supplier will within three days of the LC, issue a “PG” (Performance Guarantee) or LDD
(Late Delivery Discount) as advised as per contract.
(k) The arrival time is advised and goods are delivered on board vessel.
(l) Presentation of SGS, Bill of lading, ship mate's receipt etc, etc documents to bank and collection of
payment is applied for.
Note: First delivery date is usually 90 days or more from (date) schedule and every 30 days
there after for every consecutive shipments.
Note: This is a basic outline of the proper procedures as it pertains to the controlling intermediary.
Please know there is more complexities to the procedures then what is stated here.
4-DLC from Buyer
5-PG- from Supplier
7-Collection is applied for.
Assistance is available on request for Buyers, Sellers, Intermediaries or anyone needing help understanding
the proper procedures presented here.
You may use our Contact Us page for questions or comments.
|In any business, knowledge is power. In the
international trading business, knowledge is
This site has been created as an informational site to assist the intermediary to recognize, avoid
and stay ahead of the biggest enemy of the intermediary ...The scammer.
|Information provided here is a guide for international trading as it pertains to the intermediary.
Years ago intermediaries had no effective uniform policies or any set of guiding rules available to rely on
for international commodity trading.
For years intermediaries were doing the best they could with little or no rules at all. While other institutions
have rules of some sort which an intermediary was relying on, but its basis are informally applied and not
fully constructed as uniform applications. Although these informal applications are somewhat appropriate
for the End Buyer and the Supplier dealing directly with each other they are not applications that can work
for the intermediary.
In 1998 an effective set of guiding rules were developed and over many years they were perfected so the
intermediary could apply a safe legal set of standards to act in the position of a professional international
trade intermediary with secure, safe, procedures and applications. These rules are founded on the
doctrines of English Law, International trade rules of UCP 600 and incorporated in the ICC rules set for
Incoterms 2000 and now incoterms 2010.
These rules and regulations are the only effective applications an intermediary can successfully close a
My reference for international trade is: Clive. M. Schmitthoff, Barrister, Lawyer, Honorary Professor of Law
University of Kent Canterbury England. The Law and Practice of International Trade is in every university
law library in the world and is my bible when advising or trading.
|Full International Commodity Trade Course