You are on page 1of 3


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.
The Reasons:
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
undisclosed principal.

The End Buyer has 7 days to place the DLC into Intermediary bank account. If the Supplier does fulfill the conditions of the Pre Advise DLC the End Buyer can not change his mind and cancel. Note: One of the conditions of the Pre Advise. the Intermediary would on his letterhead. Note: The Controlling Intermediary has a binding contract from the End Buyer and now a binding contract from the Supplier. Commission is the difference between the buying price and the selling price. 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. 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. (g) After receiving the final contract from the Supplier. 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.(f) If the Supplier accepts the "Offer" from the Intermediary. Any other payment out side of the DLC is not workable for an Intermediary. (j) The Supplier will within three days of the LC. . must be met by the Controlling Intermediary to active the DLC is (evidence of Supplier in possession of goods). It has all to do with the Controlling Intermediary. the DLC can be cancelled.) Note: The DLC does not become money until the balance of the Pre Advise conditions are met by the Supplier. all charges (such as commission. The large cost of the DLC is when it is being transferred from the Intermediary's account to the Suppliers account. If the Supplier does not fulfill the conditions of the Pre Advise DLC. The intermediary is assured his commission and cannot be circumvented. fees. 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. Note: ICC Uniform Custom and Practice for Documentary Credit (UCP600) Article 38 (c) state: Unless otherwise agreed at the time of transfer. Note: The controlling intermediary does not sign and send back the contract to the Supplier until the DLC is in his account and activated. With this DLC payment method the End Buyer is protected and the Supplier is protected. (h) The End Buyer signs the contract and sends it back to the Intermediary. rewrite. the Intermediary signs and sends back the contract he received from the Supplier to the Supplier and transfers the DLC. The deal is financial secured. (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. Please remember the commission has nothing to do with the End Buyer or the Supplier. (k) The arrival time is advised and goods are delivered on board vessel. (i) After the UCP600 DLC is placed in the bank account of the Intermediary. Note: It cost very little to apply and place a DLC in the Intermediary account. Note: The only payment method the controlling intermediary can deal with is a UCP600 bank issue Pre Advise Transferable Irrevocable Documentary Letter of Credit. 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). issue a “PG” (Performance Guarantee) or LDD (Late Delivery Discount) as advised as per contract.

from Supplier 6-Delivery 7-Collection is applied for. knowledge is survival. M. While other institutions have rules of some sort which an intermediary was relying on. The Law and Practice of International Trade is in every university law library in the world and is my bible when advising or trading. knowledge is power. Schmitthoff. ship mate's receipt etc.. procedures and applications. safe. Note: First delivery date is usually 90 days or more from (date) schedule and every 30 days there after for every consecutive shipments. Information provided here is a guide for international trading as it pertains to the intermediary. These rules and regulations are the only effective applications an intermediary can successfully close a deal. You may use our Contact Us page for questions or comments. In any business. etc documents to bank and collection of payment is applied for. Assistance is available on request for Buyers. Note: This is a basic outline of the proper procedures as it pertains to the controlling intermediary. Bill of lading. but its basis are informally applied and not fully constructed as uniform applications. In the international trading business. 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. Lawyer. This site has been created as an informational site to assist the intermediary to recognize. These rules are founded on the doctrines of English Law. avoid and stay ahead of the biggest enemy of the intermediary . My reference for international trade is: Clive. Sellers. Years ago intermediaries had no effective uniform policies or any set of guiding rules available to rely on for international commodity trading. Barrister.(l) Presentation of SGS. For years intermediaries were doing the best they could with little or no rules at all. Intermediaries or anyone needing help understanding the proper procedures presented here. 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.. Honorary Professor of Law University of Kent Canterbury England.The scammer. . Procedures 1-Quote 2-Offer 3-Contract 4-DLC from Buyer 5-PG. International trade rules of UCP 600 and incorporated in the ICC rules set for Incoterms 2000 and now incoterms 2010. Please know there is more complexities to the procedures then what is stated here.