D2 Deal Almost Done!!!

[Aarman]

Dear Mr.Papa,            I have in my hands a D2 and jet fuel supply deal pending a buyer. In Texas I represent a reliable Brazilian supplier that has the product(Russian diesel)right here in the country. I read your brilliant and insightful advice on how to follow the right procedures in order to close deals, however I have had it a little hard over here trying to move beyond step 1 of the sellers procedures. The procedures state that once a Soft-offer is presented the buyer is to reply with an ICPO, once this exchange has taken place and the buyer has verified the buying ability of the buyer, the seller will be ready open direct final pricing talks within 24hrs. My problem is that only 2 companies have been able to present an ICPO all others want to know the price up-front(which will be set and decided by the seller only, not by me!). All I can say is what is written in the soft offer which states it will be a generous discount of the going plat-rate, this seems to be where I am experiencing a little grid-lock. I once convinced the seller to jump procedure, and let me say it was terrible, it almost put me out business, I quickly learnt why they have to weed out all the not so serious buyers who do nothing but waste time.

Where do I present my soft-offer to serious buyers ready to do business? How do I present it so I don't deal with 100 fake middle-men who hold up business by not following the sellers procedures?

[circehyll]

Dear Brian Essien,

Thanks for the compliments - But you will not like me too much after reading the following-

Let me try and steer you in the right direction.

(1) But you have no supplier- You only have another "seller"

Rule One:The Golden rule:  if you cannot verify the supplier you have no deal.

(2)I can only go buy what you've told me- Many  appreciate my  No B/S approach- So please, let me be frank with my reply, this way I can open up and tell you what I am really thinking. My answer or insight  should never be taken personally-  

First of all "Over Here"- My advise is effective world wide-especially USA.

we are intermediaries.Some can only act as a  "Sourcing intermediary" defined to be a "Buyer" or "Seller", depending on which side of the fence such is positioned- very few of us can act in the position of "Buyer/seller" in the united form.

An intermediary acts as a Third person or party in a usual Two party deal- While and end Buyer and a supplier can use any procedures they wish to apply amongst themselves(Some of such deals end up in court often-for breach of contract,  Even though top flight lawyers were used  to draw up contracts)

A Intermediary acting as a Buyer/seller  can only use the best and strictest rules and laws of application- they  MUST at the very least use Incoterms 2000 delivery rules and Must use UCP 600 Letters of credit rules to support their trading application. Learning such intermediary procedures means that  the trader has a very good chance in closing a deal than 99% of the nonsensical trader found on the net-Even armed with such superior trading Knowledge your intermediary has only  50/50 even chance of ever closing ONE single deal within a 2 year period of learning and practicing such procedures- THATS HOW COMPLEX THIS BUSINESS IS . THAT'S HOW HARD THIS BUSINESS IS -IT'S AN EXCITING  BUSINESS- BUT TO MAKE BIG DOLLARS THEN VERY HIGH LEVELS OF  EFFORT , ABILITIES AND SKILL HAVE TO PREVAIL

You have no supplier, you have another misguided misinformed intermediary who thinks he can act a seller of a product the thinks he as from a supplier, which he has not- on a deal that can never close, because the procedures are unworkable(even if supply was indeed real)

(2)How can i possibly know all this. You question says it all.I am in a special position in where many other traders not even my own agents disclose their "seller" to me every day - only to find out they're all fakes-

Every week FTN Exporting trashed hundreds of "deals'= add to m what my small number of trained agents Trash- then you can see that conducting " Due Diligence' is a very important aspect of the trading premise - especially when you are trading as a professional Intermediary holding position as a Buyer/seller-

(3) LOI, ICPO, ASWP, RWA, NCNDA , MPA..etc..etc..  Now go to the www.ftnexporting.com site , go to the page named "Maxima" there you will find why such terms cannot be plied by an intermediary.(4) If I approach anyone and ask for a quote for goods they have  the must at the very least produce a quote- No quote not deal- Coming back to me ands asking me "Can we see POF first is non-sense" Do you know any situation- ANY? in where a person will provide banking statements, BCL,  POF, without first considering a Quote or offer  for goods they are thinking to buy.

(5) In fact - One of the six element  of Contract formation is that-An offer  must first be signed as accepted to  be able to say that you are entering into a situation where the "meeting of minds"have agreed upon the basis in where  attributes of "correct " contract formation " procedures are in force.

(6) One of the crucial Maxims of the offer and indeed correct contract formation is that of "consideration" in that -Consideration in a more simpler terms means " PRICE"

You have no offer if no price is apparent - No price means you have no contract but rather an "agreement"- is the simplest way I can explain it.

(7) If a Brazilian came to me claiming they are a Seller of Russian diesel in where Terms such as ICPO, LOI, BCL are used- the the inquiry would be trashed within 5 seconds flat-

If a Brazilian  came to be claiming that they have Russian diesel to sell already tells me he is no supplier-

(8)Intermediaries deal in ONLY  "title" of good and never possession of such. A supplier own possession and title of goods being offered. A end buyer obtains title and possession of goods being purchased.

Understanding the above principal now makes it b very clear - If you are acting as a sourcing intermediary calling yourself a "Buyer" or "seller" the you MUST becomes attached to the middle controlling intermediary who becomes the principal of agency  and acts in then position of bother "BUYER/SELLER" He if the person who actually closes the deal for the group- This Means this Head of agency HAS the very explicit skill among other in being able to close a deal- He buys the goods form a "SUPPLIER" and sells such to an "end Buyer " using the funds of the end buyer to do so- while protecting all other who have assisted him with information in getting the group(string) formed-The middle controlling Buyer/seller Protects all commission to the group on the side going towards the end buyer - Likewise to the group going all the way to the supplier - One side never crosses over to the other-No information is able to go past the Buyer/seller - thus - he is the stop gate- He stops the whole group form being circumvented 100% of the time.

(9) It takes around 3 months to close such a deal-at FOB. You have an offer period lets say 3/5 days- you have a contract sealing period of lets say 14-21 days. You have DLC lodgment period of lets say 7 days after contract. You have acceptance period of 5 days or less - You have a period that can only happen AFTER the DLC has been accepted  in where the end buyer has to first ORDER then  HIS chartered ship to port of loading, then clear port procedures and make berthing on time. Lets say anywhere between 30-45 days is needed for such-You allow ten days for loading and slipping or moors minimum- You allow 5 days presentation period of delivery documents and 5 days for DLC Collection to a apply.

Now How can you expect to enter into such a deal if you can't even give a quote to goods being offered which MUST prevail to allow matter of contract formation to be applied- THERE IS NO "TALKING"- EVERYTHING MUST BE EXPRESSED(PUT IN WRITING)- professional intermediaries deal in "Document" we are all "paper" traders- and the simplest of all Papers to produce is the Quote- No serious buyers? But you have no real supply capability.

Exxon are real Buyers- Why don't you offer your procedures to them- See what happens? If you are looking for End Buyer - then what are you doing trading with other intermediaries-Who Just like "most seller" only have fakes buyers anyway.

NO SUCH THING AS A "SOFT OFFER"- A QUOTE IS A "SOFT OFFER"- A QUOTE NEED ONLY TO BE CONFIRMED - ONCE CONFIRMED A FULL OFFER IS ADVISED- ONCE ACCEPTED THE CONTRACT IS ADVISED - ONCES SIGNED THE "BUYER" GOES FIRST AND ISSUED S THE FINANCIAL INSTRUMENT

Whether you are dealing with a BUYER or end BUYER the same procedure MUST prevail to be able to trade effectively, safely and Legally.

A Intermediary buyer  has not got a spare billion dollars to buy goods- nor can he surrender end buyers details to early- An Buyer who Knows what they are doing becomes financially  Able(RWA)  to Buy such goods at a later time when a DLC passes from the end buyer to the Buyer who becomes the "buyer/seller" Since a TDLC can only be transferred once- then the Buyer/seller can only transfer the credit DIRECTLY to the SUPPLIER and NEVER to another "seller"  because the deal will collapse as the DLC cannot be transferred again.

So you have a Brazilian seller of Diesel- So what? It means nothing to nobody is holding position as "buyer/seller" forcing everyone to step back to expose the end principal-

No price upfront- no deal -It's that simple. Hope above helps

Regards

Davide Papa

www.ftnexporting.com

Author "international trade and the successful Intermediary"