AboutDavide Andrew Papa Expertise All matters pertaining to assisting Private import export INTERMEDIARIES, AGENTS and BROKERS Regarding International trade Laws and procedures,Letters of credits, as per UCP 600,Presentation, Commissions,International Rules of agency, and Incoterms 2000. All matters pertaining to shipping documents relating to the Import and export of products from one country to another.All matter for buyers and sellers of commodity products relating to the import and export industry.FTN with the introduction of UCP 600 will release the publication "The world is yours"(2004) made specifically for Intermediaries.Current inhouse tra ining manual is "Follow the Yellow Brick Road"(2008) Our advice website is www.ftnexporting.com
Experience FTN exporting founder Davide Papa has been trading for over 20 years- and has dealt with a huge variety of corporate entities including Gold and crude oil suppliers. FTN appeared in a major controversial Newspaper editorial in 1994. FTN Exporting official publication "International Trade and the Successful Intermediary"(ITSI) is about to be released world wide (December 2009) by the prestigious U.K publishing firm Gower's (U.K) and is listed on Amazon.com (Keyword: International Trade Intermediary) ITSI is ostensibly the first uniform intermediary trading doctrine of its kind, and will become the standard intermediary practice world wide in years to come. FTN exporting has created the said doctrine and supporting rules of trade defined as "URPIB" (Uniform Rules and Practice for Intermediaries and Brokers), which will (has?) become the most successful set of private intermediary rules ever created.
Publications The World is Yours and "Follow the Yellow Brick Road" www.ftnexporting.com . Author of "International Trade and the Successful Intermediary " (ITSI) 2009 excepts on http://www.gowerpub.com/default.aspx?page=637&calcTitle=1&title_id=11177&edition_id=12138
Education/Credentials Let school early. Became a master chef . Took up business management and later studied "international Trade at Stott's college Melbourne, Australia.
I have been reviewing your answer from couple of days and its been great
help to me in Moving further steps toward Business Negotiation.
I have Few Points to discuss for the Draft Contact the Copy mentioned
underneath. Contract of Sale of Bauxite Ore. Can you tell me in this Sales
Draft Contact Which of the Place i need to Edit.
I want the deal to go On Irrevocable Transferable UCP500 Letter of Credit.
In your Previous Answer to other Readers U mentioned the Following Point:-
(THE INTERMEDIARY MUST USE THE VIRTUE OF A UCP500 TRANSFERABLE
L/C- THATS THE ONLY WAY TO GO-IF A END BUYER WONT OPEN A
TRANSFERABLE L/C THEN ASK FOR AN"UNRESTRICTED L/C" - SO LONG AS A
COMMENT DOES NOT APPEAR ON THE L/C THAT IT CANNOT BE USED AS"
TRANSFERABLE"- YOU ARE ALLOWED UNDER UCP500 TO USE AN
"UNRESTRICTED L/C" AS A TRANSFERABLE INSTRUMENT-) For Unrestricted LC
can you tell me Whom to Contact in Bank for the Confirmation. Cause the
Manager Says that the terms transferable should be mentioned on the LC
before they do any such kind of transfer.
The Fee My Bank gave for the Transferable of the LC are:
1) LC Advising Fee = USD 25 + Courier Charges
2) Amendment in Advising Fees = USD 20/ amendment
3) Confirmation Fees = 0.20% per 3 months, minimum USD 40.00
4) Negotiation Fees = 0.15%, minimum USD 35.00
5) Transfer Fees = 0.15% per 3 months, minimum USD 50.00
6) Amendment in Transfer LC = USD 40/ amendment (0.15% if transfer
amount is changed)
7) Cable Fees = USD 40 for issuing Transfer LC
8) Any other contact by Cable - USD 20 each
9) Courier Fees - USD 50.00
10) CILE ( Commission in Lieu of Exchange ) = 0.125%
Can you tell me for the Amount of USD 950,000.00 mt How much the final
charges i have to pay.
Also the contract is on 12 month basis. Can i know for this which kind of LC i
should request and how to save my part of it.
Party A: XXXXXXXXXXX, a company incorporated in accordance with the laws
of (hereinafter referred as the Buyer).
Party B: XXXXXXXXXXX, (hereinafter referred to as the Seller)
Date of signature: XXX
Contract reference No: BAUXITE-001
Place of signature: XXX
This contract is made on a long-term basis with a view of mutual benefit and
co-development. The Seller agrees to sell and the Buyer agrees to buy
bauxite (hereinafter referred to as Bauxite) in accordance with the following
provisions:
Part A: Specific Terms
1. Definition
Metric ton or ton referring to 1 metric ton = 1000 kg
Bauxite
anchorage referring to bauxite of metallurgical grade with its place of
origin in Indonesia;
anchorage in Bintan Island of Indonesia;
US$ referring to the currency used in the United States of America;
CFR
Dry Metric Ton or DMT referring to the cost and freight condition adopted
in international contracts of sale of goods;
referring to the net weight of a metric ton after deduction of its water content
lost under 105 degrees centigrade;
Term of contract
SGS Referring to the period from which the contract commences to the date
its expires;
Referring to Société Générale de Surveillance registered in Geneva or its
subsidiaries and joint ventures around the world;
CIQ Referring to China Inspection and Quarantine (CIQ) Bureau, People's
Republic of China;
CCIC Referring to China National Import & Export Commodities Inspection
Corporation, People's Republic of China.
2. Quantity
Within the term of the Contract, the Buyer agrees to buy from the Seller, and
the Seller agrees to sell to the Buyer a minimum quantity of 600,000.00 (+
5%) metric ton of metallurgical grade bauxite.
3. Quality
US$19.00 (US Dollar Nineteen) per DMT. FOB Indonesian port
Unless agreed in writing, the Bauxite sold by the Seller shall have the
following specifications:
AL2O3 : 48%-50% Base
Total SiO2 : 8 – 12%
Fe2O3 : 14% Maximum
TiO2 : 0.65% Maximum
(L.O.I.).O : Loss on ignition 30% Maximum
Water content : 10% Maximum
Particle size : 2 mm to 75 mm (80% Minimum)
4. Price adjustments as a result of bauxite content variations
4.1 Al2O3 48% - 50% (Base content of price computation)
(a) Al2O3 48% - 50%, no increase in or deduction of price
(b) Al2O3 >50%, an increase of US$0.3 per metric ton per every 1% higher
(c) Al2O3 < 48%, a deduction of US$0.6 per metric ton per every 1% higher
(d) the Buyer reserves the right to reject delivery of Al2O3 content < 47%
4.2 SiO2 < 12%
(a) 8% < SiO2 < 12%, no increase in or deduction of price
(b) SiO2 > 12%, a deduction of US$1.0 per metric ton per every 1% higher
(c) SiO2 < 8%, an increase of US$0.5 per metric ton per every 1% lower
(d) the Buyer reserves the right to reject delivery of SiO2 content > 13%
4.3 Water content
The water content of the bauxite to be supplied shall not be greater than 10%.
Should the water content be between 10%-12%, the extra freight charges
incurred by the increase in weight shall be borne by the Buyer and Seller
equally. Should the water content exceeds 12%, the extra freight charges
incurred by the increase in weight shall be borne by the Seller solely.
5. Delivery & shipping schedule
The delivery term will be FOB Indonesian port. The provisions in Incoterms
2000 are applicable to both parties.
Total contract quantity:600,000 + 5% dry metric ton
Effective contract term: within 12 months upon the delivery of the first
shipment
Shipping schedule:
April 2009 50,000 DMT/month = 50,000 DMT
May 2009 & thereon a monthly shipment of 50,000 DMT till the
contract
expires
6. Loading & transport
6.1 The Seller shall, 15 days before a schedule shipment date, inform the
Buyer in writing by letter, or email, or telex, or fax the contract reference
number, product name, quantity, amount, gross weight and loading date of
the port of loading so that the Buyer can arrange a charter to take delivery.
6.2 When the Seller fails to load punctually the bauxite into the Buyer’s vessel
which arrives at the port of loading on schedule, the Seller shall bear the
freight charges of the vessel in ballast and demurrage thus incurred.
6.3 The seller shall guarantee a daily loading of 8,000 metric tons. The Seller
acknowledges the dispatch and demurrage rates as stipulated in the ship’s
charter and the implementation of such terms.
6.4 The Buyer shall guarantee that ships chartered shall be suitable for
berthing at the specified anchorage at Bintan Island, Indonesia and shall have
the facilities and equipment that cater for proper loading of bulk cargoes of
wet bauxite.
6.5 When there is a shortfall in shipment quantity, the Buyer shall be entitled
to sue for sales amount already paid and extra freight charges thus incurred.
7. Weight determination
7.1 Each bauxite shipment shall be weighed at the port of loading. SGS,
Indonesia shall issue a certificate certifying its weight according to the draft
of the vessel. The weight thus derived after deduction of water content shall
hereinafter be called “Seller’s Invoice Weight”.
7.2 The Buyer can at its own expense appoint a third party or its staff to be
present at the port of loading to witness final weight determination.
7.3 The Seller can at its own expense appoint a third party or its staff to be
present at the port of loading to witness final weight determination.
8. Sampling & analysis
8.1 Sampling of each shipment by the Seller shall be taken during loading.
The buyer shall have the right to be present at each sampling. The analysis
will be made and certified by SGS, Indonesia, which shall issue quality
analysis reports in accordance with the results of analysis carried out on the
bauxite sample taken during loading. The bauxite sample taken during
loading shall be separated into 3 lots; one shall be sent to SGS Indonesia for
quality analysis, one to the Buyer, and the remaining one to be sealed for
analysis by an arbitrator should such a need arise in the future.
8.2 The Seller shall state in its invoice the bauxite quality in accordance with
the quality analysis reports issued by SGS Indonesia. The results therein shall
be used as the basis of computation when the Seller issues its provisional
payment invoice.
8.3 Should there arise any doubt about the quality of the bauxite, the sealed
sample (the Seller shall be responsible for safe keeping of 90 days) shall be
sent to an independent laboratory or analysis organization which is approved
by both parties for analysis. The independent laboratory or analysis
organization to be appointed should be of good repute and internationally
recognized. Results thus derived shall be final and binding on both parties.
All the expenses incurred shall be borne by the party whose quality claim is
farthest from the final results derived. Should the final results fall in the
middle of the quality claims made by the two parties, such expenses shall be
borne by them equally.
9. Payment
Payment shall be effected by sight letter of credit in accordance with the
following conditions:
9.1 The Seller shall 10 days before loading request the Buyer to issue a sight
letter of credit to be received by a bank nominated by the Seller.
9.2 The seller shall draw down a provisional amount equivalent to 90% of the
sale proceed under the letter of credit on production of the following
documents:
(a) An invoice bearing the Seller’s signature and the contract reference
number in triplicate;
(b) A bill of lading in triplicate to be produced by the Seller to the Buyer or
Buyer’s nominated agent;
(c) A certification by SGS Indonesia in respect of the weight and quantity (net
quantity after deduction of water content from the quantity stated in the bill
of lading) stated in the Seller’s invoice;
(d) A quality analysis export certificate issued by SGS Indonesia at the port of
loading;
(e) The original and 2 copies of the certificate of origin issued by the Seller.
9.3 10% balance payment
The quality and weight certificate issued by the CIQ (China Entry-Exit
Inspection and Quarantine Bureau) or SGS China at the port of discharge shall
be used as the basis of computation. Balance payment will be effected by the
Buyer by T/T upon the production of the final invoice issued by the Seller and
a copy of the analysis results report issued by the CIQ/SGS China. Should the
Buyer be unable to produce the analysis results report issued by the CIQ/SGS
China within 14 days after the vessel arrives at the port of discharge, the
balance shall be computed in accordance with the quality analysis report
issued at the port of loading.
9.4 Both parties shall bear its own bank charges.
10. Notice
All notices given under this contract shall be in writing and confirmed in
writing and shall be addressed to the parties at the addresses set forth below
or at such other addresses as each party may from time to time notify the
other:
Seller: XXXXXXX
Fax
Telephone
Email
Buyer: XXXXXXX
Fax
Telephone
Email
Part B: General Terms
1. Title and risk
Seller shall transfer valid and clear legal title of bauxite to buyer. Title to, and
risk associated with the bauxite passes to the buyer at the time of discharge
of the bauxite from the loading device into the hold of the buyer’s ship at the
port of shipment or appropriate anchorage.
2. Guarantee
Other than the product specifications as specified in clause 3, no other
warranty of any kind, in relation to bauxite quality is given by seller.
3. Entire Contract Modification
This contract constitutes the entire agreement between seller and buyer
concerning the subject matter hereof. Any modification of this contract shall
be made by written agreement between the parties.
4. Breach of contract and bankruptcy
4.1 Breach of contract
Except as covered in clause 6- Force Majeure, if one party is in breach of any
terms of the contract, the other party shall in writing require the defaulting
party to remedy the breach. The abiding party has the right to terminate this
contract if the defaulting party fails to remedy its breach within 28 days of
the serving of a written notice to the defaulting party. The defaulting party
shall compensate for the other party’s losses arising from its breach. The
termination of the contract shall not affect any unperformed obligations of
either party prior to the termination.
Answer
Dear Kash
I am prepared to answer ONLY basic intermediary questions to help confused trader and nothing more- I don't do research work and close deals for people simply because they ask-It would be an impossible application for me to try- I would have thousands asking me same type of complex question if i serviced your needs-it would also be very unfair to all those intermediaries who have purchased my material or have retained my services-
But-I can tell you this - You need to know what you are doing- and you need to learn procedures before to attempt such deals-
What do I mean? Read below?
(1) IT'S UCP600 not UCP500 which ceased to apply July 2007 when new banking rules were introduced- that means you have obtained a copy of our past outdated book or have read very outdated answers from my All experts forum which has been operating since 2001-
