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.
Thank you in advance for your prompt reply and many thanks for your keeping us informed of proper methods of doing business, very informative.
Is this safe to accept as method of payment?
Buyer bank do NOT accept issue BCL or RWA.
They DO ACCEPT issue Pre-advice of the LC, but for that they need a Soft (Partial) POP. Would seller agree in send a partial POP to buyer bank in order to open the POF???
Payment method with Irrevocable, NON transferable, DLC would be accepted??
Thanks,
AB.
Answer
Dear Arianne
I assume you have asked for a UCP600 DLC from the buyer.I assume you have secured the offer from the Supplier.
I assume you have purchased our publicaiton or have studied our answers on the net-(which is simply not enough alone)
Assume?? because there is no way to fully define the process here- but let me give you some important insight-
An end Buyer dealing direclty with a "Supplier" (in possession of goods) can do what ever they like- Many will end up in disputes- some will end up in court for using stupid applications- An Intermediary cannot use such terms and procedures-
And a bank have very little knowledge of the intermediary business anyway- they can't effectively advise a intermediary and that FTN epxorting is the creator of the only fully tested and viable uniform intermediary applicaiton anyway-world wide. We have experienced lawyers and bankers who are our agents and seek support for us.
Running to a bank to ask questions is a wasted effort , and rightfully so, as they get such questions many times daily.Once you get the credit in your account - then they will help-
BUT HAVING SAID ALL THAT TAKE NOTE: THERE IS A OTHER REASONS THAT EVEN A END BUYER DEALING WITH A SUPPLIER DO NOT UNDERSTAND.
(1) "POP" IS PART OF THE CONTRACT -OBLIGATIONS OF PARTIES TO EACH OTHER AS PER THE CONTRACT OF SALE- PAYMENT IS ABOUT FUNDS ISSUED TO PURCHASE THE GOODS-
ARTICLE(4) UCP600 RULES: BANK CANNOT BECOME INVOLVED IN the matter of the sales CONTRACT - BANKS DEAL IN FIANCE NOT GOODS- SO THIS PART IS CLEAR -A BANK BREAKING ITS OWN RULES COULD END UP IN SERIOUS TROUBLE AND BE FINED HEAVILY FOR BREACHING SUCH RULES- YOUR BANK HAS ADVISED YOU WRONG- OR YOUR QUESTION WAS WRONGLY APPLIED- IN WHERE PARTIES HAVE NOT UNDERSTOOD THE ROLE OF THE INTERMEDIARY "BUYER/SELLER"
ARRIANE if a bank say's they need POP then the bank has made a criticial mistake- I can't see a bank giving such advice, UNLESS IT IS GOING TO ISSUE A "IN HOUSE DLC" OR OTHER TYPE OF CREDIT NOT BOUND BY UCP600 RULES-WHICH MUST NOT BE USED BY INTERMEDIAIRIES any way-
INTERMEDIAIRES MUST ONY USE UCP600 APPLICABLE CREDITS-WHICH NOW REPRESENT OVER 90% ISSUANCE CAPABILITY OF ALL BANKS AROUND THE WORLD
(2) POP: No such thing??? Independent inspectors like SGS attest to the quality of goods- ONCE SUCH IS ON BOARD SHIP.The goods belong to the end buyer ONCE such crosses the ships rails in then port of loading- Meaning? Supplier gets paid.
THE PAYMENT MADE AND CONTRACTS HAVE TO BE SIGNED LONG BEFORE THIS HAPPENS-NO such thing because even if the buyer inspects the goods at the port of loading, it does not mean that the same goods in the condition as loaded would arrive at port of unloading-and unless one is an expert themselves - how could they visually see that the crude oil being loaded is the wrong API, or the sugar is full of dirt...etc.... they can't.
A SGS certificate guarantees the quality on board ship before it leaves loading port- If the goods arrive not as per SGS certifcation then SGS could face compensation payments if it is they who provided the wrong quality certification-
(3) YOU HAVE NO genuine "POP" capability and should be CORRECTLY defined as "PPI" meaning - "Policy Proof of interests"- also defined as "evidence " of goods being sold under FOB /CIF delivery rules - One the Goods are loaded the BOL is provided- this is "first class evidience" and title to goods being purchased and resold.
The POP you are taliking about is "First class evidence" proving that you have a real sugar supply capability-
(4) The Business with the supplier is with you- The Business of the end buyer is with you - The end Buyer and supplier MUST never be revealed to each other until it's safe to do so- You are the buyer of the supplier and the seller to the end buyer- two contract , two deals going on at the same time.
It seems to me that your question defines that You are acting not as a Buyer/seller but a sourcing intermediary (SI) - which must not be allowed to apply , unless you are attached wth a good well "invormed Buyer/seller" ( wish you luck finding one ) who will look after your "interests" - you cannot act in the position of ONLY an "SI" -you'll be circumvented evey single time.
(5)If you have obtained correct suppliers quote or offer - Then you have "Proof" in you hands - as its ostensibly seems to others - in line with accepted rules of agency edicts- You are Buying on "behalf of an undisclosed Principal" - You are selling goods on behalf of an "undsiclosed principal"- This means - Offer , contracts and DLC payments from the buyer must apply first- in conjuction with the BUYER signing contract of supply with the supplier- If you ahve not verified supply and are dealing with another misguided "seller", then the deal will fail.
"Intrests of the sellers" means supplier is allowed to verify that the intermediary has a sealed contract to buy sugar or whatever goods being offered and nothing more-
The PPI you send to the Buyer defines to discloses suppliers details and the process needed to apply to verify intrests of goods held by the "seller" and intermediary-
Just before the PPI is advised the Buyer to his supplier seals contract with Supplier- PPI is then issued to the end buyer-
(6)The pre-advised UCP600 DLC is advised to you from the End buyers or his bank - it's worthless when issued but can become valuable once YOU deliver . You need to get rid of the pre advised status. You do this by issuing the PPI certificate as applied on your contract in Blank form as created by you- The contract states exactly what will be provided word per word a sit relates to the PPI-
SO A credit is given, PPI is advised- Sredit is made active- That's why the Pre advised credit is issued - dependant upon the legal maxim of "Quid Pro Quo"
POF means nothing and cannot be used by an intermediary - "Look I have a million dollars in My acocuont" does not mean " i will buy goods being offered"
RWA meand "Ready, Willing and financially able" - the rule is dictated here by rules of contract formation-
Buyer is given an offer , to whch once offer is accpeted , contracts are issued.If and end buyer was dealing with a supplier - and ICPO backed guarantee and othe financial details may need to apply- In all cases the end buyer will HAVE to issue the DLC FIRST once contracts are signed- The goods on board ship loaded will not leave until the DLC is advised and is accpeted first-
As it applies to the end buyer doing business with a Supplier so does it apply when an intermediary is inloved- The Only RWA that an intermediary can accept is the DLC issuance being applied FIRST-
In effect FTN's doctine is the same as a End Buyer dealing with a supplier -in a two party deal- except now a third party is involved.The Intermediate "buyer/seller"
FTN exporting has not made up its doctine - is fully supported after FTN has adpated and adopted the very same rules that suoplier must apply when dealing with end buyers-
If the buyer tries any funny business in where they get the disclosed PPI in where they managed somehow to stop the credit (nealry impossible) then they have breached contract with you and can be in trouble accordingly-for "breach of contract" - so "proof" applicaiton MUST be made enforceable as a matter of contract.You can' t sue the Bank because they will not breach UCP600 rules in matters of Article (4)- they may try to fool a person by making such POP claims, but when the actual transaction starts - no involvement between the contract of sale and DLC must be apparent, because the DLC is GUaranteed by the bank- that so long as procedures are followed , the bank has no choice but to allow payment to apply via collection rules - no matter how hard the buyer tries to make the credit invalid, the bank MUST abide with the Guarantee they are inferring- that's why once a DLC is issued it's done so as "irrevocable"
(7) You take the information from your letter head from the offer you ahave from a supplier-(if you have an offer form another intermediate "seller" You have NO offer-thus no deal) place detials in the PPI document and send it to the end buyer banks via fax (or via your advising bank )- The end Buyer bank reads the DLC conditions one of which is " A documeNT shall be provided marked as PPI DEFIEND AS POLICY PROOF OF INTEREST CERTIFICATE"- to which once accepted shall cause the pre advised status on the credit to become a fully active credit.The bank is not intrested what is written on the PPI document, they just want to see that such was issued as per the conditions of the Credit-
(8)Therefore- eveything is marked down word per word on who does what and when ON THE CONTRACT OF SALE .You cannot wait for authentication of "PPI certification" , so "issuance" alone turns the credit into a fully active instrument.You pay the transfer fees (or get buyer as a matter of contract to do so is the formal way)and transfer the part of the credit value to your supplier only as a non transferable credit.
You cannot wait for PPI authentication- What happens if the end buyer does not authenticate ever?- You are left with a dud DLC- BUT !!! AN IREREVOCABLE DLC CANNOT BE REVOKED UNLESS FRAUD IS INVOLVED- IF the Bank MAKEs THE CREDIT ACTIVE AND LATER FIND THE PPI IS FALSE- THEN ITS FRAUD- AND THE DEAL WOULD COLLAPSE.SO TRYING TO BE CLEVER BY GIVING A FALSE PPI WILL COST YOU THE DEAL ANYWAY.-Proven fraud is the only action that can cancel the irrevocable status of the credit-
Only a UCP600 Confirmed Pre advised DLC can be used- and not all bank issue such-adds further on why YOU must have the DLC is your account as accepted before PPI is ever given.
Assume there is a lot more more to it - read www.ftnexporting.com vai "Maxima page ", " Matters of POP"
Site information is simply not enough information to trade as an intermediary-FYBR V is over 150,000 words long and still I could add another 50,000 words easily.
