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.
Question Hi Davide, I've read many of your answers with great interest. Apologies in advance if this question has been answered already - I could not find it.
Sellers often wish to deal only with 'end users'. Is it ethical or even legal to act then as a Buyer/Seller?
Thanks in advance,
Russell
Answer
Dear Russell
Thanks for your compliments- Big question? let me give you just the basic premise-As the whole intermediary doctrine is based on such a question-
Both legal and ethical-Yes.
Ethical- A supplier of coal can't find end buyers- If it does not get sell stock soon 100 people could lose his job-
A end buyer whats coal - badly it can't find a suppliers because they are all booked out for years- If the end buyer does not get coal his factory will close down- many people will be out of work-
The coal buyer is willing to pay 90 dollars per mT on coal-
FTN exporting has secured a coal supplier ?
The current price of coal is $85.00 per MT FOB to FTN exporting who has no other intermediaries to protect - resells the coal with an offer of 88.00 per mT FOB- than seems very ethical to me- it seems that some real skill is needed to close such a deal- and indeed some real skill is neede4d to source a supplier- real skill and effort deserves payment.
In fact it is very difficult to get an offer from a real supplier for items which are wanted the most-Very very difficult- something which is not apparent to your question-
Words are easy to apply and write- but action is something else-
it took FTN exporting 6 years to get one coal supplier- 6 years of trying to secure one good firm quote- 6 years after the price of coal has collapsed in where the world is in an economic slump- while the supplier were busy, they could not be bothered to provide such a quote-
At the same time ftn got his quote for coal , a end buyer was asking for coal-so timing is also crucial-
so to start with -Remember its very hard to close such deals and very hard to find suppliers let alone end buyers- thus a real skill and ability has to be apparent-I can't teach such ideal- i can only advise effective procedures (as per our publications) 99.9 % of internet traders have no idea on what they are doing and most are offering false goods-(that's indeed unethical and fraudulent)
As for legality-
A seller is not a producer or supplier - and "end buyer" is not a Buyer-
In the normal course of business a producer often deals directly with a end buyer -
One has title and possession of goods an the other takes title possession of goods-
Title is about " Who owns Property in the goods offered " - Carriage is about delivering possession of goods into the hands of the end buyer-
The Title to the goods has as much tangible value as the actual physical goods being traded upon-because he who owns title owns the goods-
The job of the Intermediary holding position as a buyer/seller is to transfer the title from the producer to the end buyer- while directing the goods towards the end buyer-
In effect the Buyer/seller is BUYING buying the goods and selling such goods to their own end buyers- (as it ostensibly seems-)
Information about the end buyer is valuable to the supplier
Information as to your supplier is valuable to a real end buyer.
The hardest first part of any deal is to get control of supplier - after which the second part of the deal is to secure the end buyer-
Control here simply means -The intermediary has to obtained an offer or quote from a direct supplier to be in a legal position to offer his interests in the goods to others-
This protocol has to Legally apply as far as the intermediary goes when holding the Buyer/seller status-
In that ONLY A "SELLER" OFFERING GOODS TO A END BUYER CAN DO SO - IF THE SELLER HAS OBTAINED AN FULL OFFER FROM AS PRODUCER/SUPPLIER AND OWNER OF GOODS- IT CANNOT OFFER TO AN END BUYER GOODS OFFERED BY ANOTHER INTERMEDIARY-
What the Buyer/seller does with the goods in non of the suppliers business- What is his business is that among other things-
(a) He has offered his goods to a " Buyer" and that he expects to get paid accordingly before ship leaves the loading port-
(b)The Seller has the right to make arrangement to resell such goods to his own end buyer- Thus by default the Buyer/seller is flipping his obligation of the supplier over to his end buyer-
He does that using procedures and experience-which one has learned and studied-
The buyer/seller is simply " flipping a contract" but is doing so in a manner as endorsed by effective Delivery rules, Rules of Agency and Banking rules-
"Delivery" under incoterms rules means just that - "Delivery of presentation documents"
Thus it all becomes a matter of learning studying and applying such rules in manner in where instead two parties to a deal is being applied- a Third person may become involved as well- Such a third person may have many intermediaries to protect- nevertheless that's his business to apply to those who assisted him with the deal being plied.
As per the deal, the end buyer does business with the middle buyer/seller - Who does business with his supplier-
Invaluable information form once side does not pass to the other side because the middle buyer/seller is able to control the deal and stop such circumvention to occur-
In effect the middle controlling intermediary has two offers two contract to ply at the same time- as all road stop and start with the controlling in middle Buyer/seller-
It may not be obvious at first but Ebay works on the same principle- Goods are sold via ebay- goods which ebay does not own but collects commission upon it sale- Goods which the other side have not seen except for a picture- Ebay simply ensure that the goods as offered on ebay are advertised correctly-'Title " crosses to the buyer when the auction is completed- Payment is made first - goods delivered weeks later-
In the case of the intermediary - documents replace such goods- document which gives title to the of ultimate holder such-
Even when going to a local shop - you ask for something over the counter - The goods are given first - money changes hand second-
In international trade Money is only advised first- goods are delivered (TITLE, Payment is then sought and collected upon when title has been delivered-
A car dealer in Ohio USA sells an old Mustang to the Buyer in Australia-
He will ask for some kind of payment instrument - When the payment instrument is accepted (DLC) , the dealer produces the papers to the buyer in where the transfer of title is enacted-
The end buyer does not trust the supplier not that the supplier trusts the end buyer to pay for the goods-
thus a bank is used to ensure conditions of payments is applied for in a very specific safe manner-
The dealer only needs to take the title documents to his bank- prove that title is going to be applied officially on official forms - the bank if all is in order will allow the dealer to collect on his financial instrument there and them even though the car is still in his yard- if in the deal the buyer has asked the dealer to deliver the goods to Australia as well-the freight is also arranges and that not just the title to the car but documents proving that the car is loaded on ship needs to be produced before the dealer gets his money-
Nevertheless the dealer will get his money in cash when he has delivered TITLE- The buyer gets possession of his car 5 weeks later
The car arrives 5 weeks later- it must arrive as advertised-or litigation could follow- the end buyer surrenders his title to prove he is the owner of the goods on board- and takes possession of the goods accordingly-
In effect the intermediary is trading based on everyday commercial market principles of doing business - except local laws can only be made to apply up to a point - because when selling goods from one country to another another an effective base application based on international trade laws are made to apply-
