Responding to unsolicited orders by JasoRobinson


									Responding to Unsolicited Orders

                     A Team Canada Inc
             On-line Guide for Exporters
This printable version of Team Canada Inc's
online guide "Responding to Unsolicited Orders"
has been made available FOR YOUR
connecting to the Internet.

However, it should be noted that the guide was
ORIGINALLY designed for online use and that
its format doesn't transfer particularly well to
print format. Specifically, the guide refers
readers to numerous Web resources which
online readers can easily access by clicking on
the links provided; on paper, these referrals
appear as long Web addresses which make
reading difficult. YOU SHOULD also NOTE
THAT, due to space constraints, some long
Web addresses in this document had to be
divided into two or more lines; it should be
noted that the complete addresses must be
entered as one line in your Web browser.

To obtain further information on this guide's
topic or on other Team Canada Inc guides,
please visit ExportSource at
or contact us toll-free at 1-888-811-1119.
Responding to Unsolicited Orders
This tool will help the managers of small and        of costs, regulations, logistical requirements, and
medium-sized companies respond to unexpected         anything else that will have a bearing on the
inquiries from abroad. It is primarily intended      terms of the transaction. This template offers
for companies that already have some                 a framework to guide them in that process.
knowledge of international trade or                  It will help them to:
are just starting out in exporting.
                                                      q   understand the process involved in
                                                          responding to an unsolicited order
Many of the companies exporting today got
                                                          from abroad;
started in international trade by responding to
an unsolicited inquiry from a potential foreign       q   develop an estimate of what price and terms
buyer. Typically, the response takes the form of          they need from the foreign buyer in order
a quotation which provides details of what the            to make a deal worthwhile;
seller is prepared to offer, at what price, and on
                                                      q   prepare a quotation that can serve as the
what terms. The potential buyer can accept the
                                                          basis of negotiation with a potential
quotation, negotiate to modify it, or walk away
                                                          foreign buyer;
from the transaction.
                                                      q   draw up the terms of a contract with
Before drawing up a quotation, the seller must            the foreign buyer;
determine if the firm can fulfill the order,
                                                     The tool will also identify and access sources
examine all of the factors involved in sending
                                                     of information that users will need in order
goods from Canada to the target country,
                                                     to perform these tasks quickly and effectively.
estimate the costs involved and decide whether
or not the proposed transaction is worth the
                                                     Generally, the following steps are involved
effort. All of this has to be done soon after
                                                     in responding to an unsolicited order.
receiving the request, otherwise the potential
buyer may lose interest. If a company has never      Task 1: Internal Research
exported, gathering all of this information
                                                     Task 2: External (Market) Research
represents a significant challenge.
                                                     Task 3: Landed Cost Calculation
It is also important to recognize that a quotation
                                                     Task 4: Quotation
represents a legal commitment that should not
be taken lightly. Companies that repudiate           Task 5: Feasibility Test (Diagnostic)
undertakings made in a quotation could
                                                     Task 6: Negotiation
find themselves liable for damages.
                                                     Task 7: The Contract
That is why firms preparing a quotation will
                                                     Task 8: Order Fulfillment
want to develop a reasonably accurate estimate

Internal Research                                      PRICING
Unsolicited requests from abroad can come as           Marketing
letters, faxes or telephone calls. If the request is    q What pricing strategy should be adopted?

verbal, the call should be logged and the caller        q Is this a market in which the company may

asked for written confirmation of the request.            want to do repeat business?
Correspondence should be stamped with the
date on which it is received. Special care should      DELIVERY
be taken with requests in a foreign language:          Packaging and Transportation
they should be translated professionally to             q Has shipping any experience in preparing
ensure they are properly understood.                       orders for this market?

The first task in developing a response to the          q   Can it handle any special labelling or
request is to gather information from other parts           packaging requirements?
of the company. The objective is to determine           q   When can the item be prepared
whether or not the firm is able to fulfill the              and shipped?
order, and if so, at what time, at what price,
and on what terms. Individuals responsible for
different aspects of the company's operations
have to be consulted to get a picture of how           TERMS OF PAYMENT
ready the firm is to proceed and what impact           Financing Exports
the order may have on other operations.                  q What financial instruments should be used?

Below are a series of questions to determine            q   When should payment be made?
the information you may need and the kinds   
of demands you may require from others in
your company to structure your response                Canadian Commercial Corporation
to the unsollicited order.                             - Progress Payment Program
                                                         q What currency?
                                                        q   Are there any special conditions required?
  q Is the item already in inventory?        –expfinance.cfm
    If so, how many units?
                                                       Export Development Corporation
Manufacturing                                          - Financing Services
 q When can the product be produced?
 q   Would additional inputs be required
     to satisfy the order?
 q   Are product modifications needed?
 q   What would be the impact on other
     parts of the operation?
 q   What would be the financial impact?

External Research                                     EXPORT REGULATIONS
In responding to an unsolicited request, it is a      In certain cases, Canada regulates the export of
good idea to establish early on just how complex      goods. Some countries are under embargo and
the transaction is likely to be. International        Canadians cannot export there. Dangerous and
trade represents a higher level of complexity         hazardous substances are carefully regulated in
than does domestic commerce. In some cases,           terms of packing and transportation.
that complexity imposes the kind of additional
time and costs that could turn a promising deal       For more information on export regulations visit:
into a money-loser. Companies are well advised        Canadian Automated Export Declaration
to know exactly what they are getting into  
before they commit time and resources to a
transaction.                                          Export/Import Controls Bureau
Above all, potential exporters need to
understand the regulatory regime both in              IMPORT REGULATIONS
Canada and in the target market and how it
affects their products or services. Regulations       Some countries keep out certain products
invariably bring with them a requirement for          or impose quotas. Many maintain technical
paper-work: applications, permits, approvals,         standards, environmental regulations, or other
certifications. Potential exporters will want to      legal requirements that could exclude a product
know just what documentation will be required         that is not approved, delay its entry, or impose
and how much time its preparation will absorb.        additional costs for inspections and certification.

Beyond rules and regulations, there are the           PACKAGING, LABELLING OR
logistics of physically moving goods (or people)      PACKING REQUIREMENTS
from Canada into the target market. How can           Many countries have regulations governing how
this be accomplished? What costs are or could         products are to be packaged, what information
be involved? Who will be responsible for              should be included on the label as well as the
making and monitoring these arrangements?             language on the label, and how shipments of
Included in these estimates are the costs of          the product are to be packed.
insurance and any special risks that might
be incurred in the target market.                     EXPORT LICENSES
Below is a listing that can help guide you to the     There is a small group of products that require
information you will need in order to structure       export permits. These include armaments and
the deal, calculate costs and fill out a quotation.   environmentally endangered species.

MARKET INFORMATION                                    IMPORT LICENSES
Click here to access various         Many countries require permits for the import
sources of information about the market in            of dangerous or controlled substances, or items
question.                                             that might pose a competitive threat to local

TRANSPORT AVAILABLE                                  Landed Cost Calculation
Four modes of transport are available: air, rail,    A critical step in responding to an unsolicited
truck and ship. Shipments combining two or           order is to prepare a reasonable estimate of the
more of these modes are called inter-modal.          costs your firm will incur in fulfilling the order.
It is important to determine which mode or           Obviously, quoting too low runs the risk of
combination of modes represents the most             losing money on the transaction while quoting
cost-effective means of physically moving            high risks losing the buyer's interest. Preparing
the product from its Canadian origin to              an accurate estimate, however, requires juggling
its destination.                                     many additional factors above and beyond those
                                                     involved in domestic production. The most
SHIPPING SCHEDULES                                   important of these are the costs associated with:
Once a transport mode has been determined,            q   preparing the many documents required
it is important to get some idea of shipping              in an international transaction;
schedules since this will have an impact on
delivery times. For example, seasonal variations      q   labeling, packaging and packing the
will affect the availability of ocean-going               shipment for transport;
transport.                                            q   moving the shipment from the point
                                                          of origin to the destination;
                                                      q   payment of any duties levied by the foreign
Many buyers will require that goods are insured           government; and
against loss or damage. Sellers will also want to
insure a transaction against default by the buyer.    q   financing charges, insurance and the
Find more information on insurance                        costs of issuing payment instruments.
requirements by visiting:                            Even familiar business cost items such as
Export Development Corporation                       promotion and marketing take on additional                           complexity in the international arena since they
                                                     might involve travel, translation, and long
CREDIT CHECK OF CLIENT                               distance telecommunications.

If possible, it is a good idea to get some idea      The following is a worksheet that can help you
about the reliability of the potential buyer.        include all of the relevant costs involved in
Many developed countries have the equivalent         completing the transaction you have in mind.
of a better business bureau, ad credit bureau        Use the spreadsheets below as a tool to help you
or a chamber of commerce that can provide            keep track of, and add up the relevant costs.
business references.                                 (Note: Definitions of terminology used within
                                                     the tables are given on the following
RISK FACTORS                                         worksheets.)
Are there special risks (political instability,
economic conditions, climate, etc.) that
need to be factored into the deal?

                Product                           Cost               Port and lading charges                       Cost
Materials                                     $                  Demurrage or storage                         $
Labour                                        $                  Wharfage                                     $
Plant overhead                                $                  Special charges                              $
Product modification                          $                  Marking                                      $
Administration                                $                  Lading charges                               $
Domestic financing (e.g. bank charges) $                                    Total, “Free on Board” (FOB) $
                Total Domestic Cost $

                                     Foreign marketing and costs of sale                                           Cost
Travel and accommodations                                                                                     $
Promotional events (e.g. trade fairs)                                                                         $
Communications (e.g. telephone/fax, courier)                                                                  $
Translations                                                                                                  $
Negotiations, legal fees                                                                                      $
Foreign agent's commissions and fees (if applicable)                                                          $
                                                                        Total “Ex Works” (EXW) $

 Physical preparation of shipment                 Cost                International carrier                        Cost
Labelling                                     $                  Freight                                      $
Packaging                                     $                  Cargo insurance                              $
Packing and crating                           $                  Charges for special requirements             $
Marking                                       $                     Total, "Cost, Insurance and Freight" (CIF) $
Strapping                                     $
                                                                           Landing charges                         Cost
Domestic financing (e.g. bank charges) $
                                                                 Unlading                                     $
    Other costs of preparation for transport
                                                                 Special charges                              $
Documentation (including consular invoices)   $
                                                                 Storage                                      $
Freight forwarder's fees                      $
                                                                   Total, "Delivered Duty Unpaid" (DDU) $
        Total, product ready for shipment $
                                                                        Customs clearance                          Cost
           Inland freight                         Cost
                                                                 Foreign duties                               $
Loading charges                               $
                                                                 Broker's fees                                $
Transport                                     $
                                                                 Delivery to customer                         $
Unloading charges                             $
                                                                 Loading charges                              $
     Total, product ready for shipment        $
                                                                 Transportation                               $
                                                                       Total "Delivered Duty Paid" (DDP) $

                                 International financing charges                                       Cost
Costs of financial instruments (e.g. letters of credit)                                           $
Export credit insurance premium                                                                   $
Discounts on receivables                                                                          $
Costs associated with currency conversions                                                        $
                                                          Total cost of transaction before profit $
                                                                                 Margin (in %) $
                                                                                   Export price $

DEFINITIONS OF LANDED COST                                     Travel and accommodations: Includes all travel
CALCULATOR TERMS                                               expenses incurred by your company in visiting
                                                               the target market for research, a mission or a
Product cost: This section summarizes the costs
                                                               trade show, and it may include the costs of
of the physical inputs and administrative
                                                               bringing foreign partners (agents, distributors,
expenses involved in physically producing
                                                               etc.) from the target country back to Canada.
the goods.
                                                               Promotional events (e.g. trade fairs): Include all
Materials: What are the costs of the material
                                                               costs associated with the event (promotional
inputs required to fulfill the order?
                                                               materials, registration fees, booths and displays,
Labour: All costs related to the labour                        etc.) except those already counted as travel
(direct and indirect) required.                                expenses.
Plant overhead: All costs related to the plant                 Communications (e.g. telephone/fax, courier:
overhead. This should include utilities, rent,                 Include all communication costs (telephone,
taxes etc.                                                     couriers, faxes, e-mail etc.) incurred in
                                                               completing the deal or likely to be
Product modification: Any costs required to
                                                               incurred in fulfilling the order.
modify the product for the new market.
                                                               Translations: Costs of translating promotional
Administration: Any additional costs incurred
                                                               materials, product specs, labels, correspondence,
in administering the transaction. This may
                                                               etc. into and from the language of the target
include special charges such as the costs of
hiring researchers or performing credit
checks on the prospective customer                             Negotiations, legal fees: Include all lawyer's and
                                                               legal fees incurred in drawing up the contract.
Domestic financing (e.g. bank charges): Any
costs required to finance additional production                Foreign agent's commissions and fees (if
to fulfill the order.                                          applicable): Are commissions, finder's fees,
                                                               distribution fees etc. owed on the transaction?
Total domestic cost: The total of all costs
                                                               These should be converted from foreign into
of production incurred in Canada.
                                                               Canadian currency before being entered
Foreign marketing and costs of sales: This                     on thisworksheet.
section summarizes all costs related to
promoting, advertising and selling the product
in the foreign market.

Total Ex Works (EXW)*: The total of all             be prohibited (e.g. packaging that does not
production and marketing costs before               show the contents of the product).
shipment. Ex Works is one of the INCOterms
                                                    Packing: Individual packages have to be
used to define the terms of an international
                                                    assembled into boxes, crates, onto skids, or into
transaction. An Ex Works price includes all costs
                                                    containers. The goods must be packed in such as
involved in producing something to the "factory
                                                    way as to reduce the possibility of damage, theft
gate." If a transaction were specified as "Ex
                                                    or spoilage and the buyer may specify how they
Works", the buyer would assume responsibility
                                                    expect this to be done. The packing materials
for all costs incurred in moving the goods from
                                                    you select will depend on the size, shape,
the point of origin to the final destination.
                                                    weight, fragility, and contents of the product;
Physical preparation for shipment: These are        whether the product will ship by air or sea;
the costs incurred in labelling, packaging and      and the time, climate, conditions, and inland
packing goods in a suitable way for transport to    transportation in the destination country. Follow
the target market.                                  these guidelines for packing your product:
Labelling: Product labels usually must be in or
                                                    Pack the shipment in a strong container. Fill the
at least include the official language(s) of the
                                                    containers to capacity. Distribute weight evenly
target market. There may also be specific
                                                    within the container
regulations governing the content of the labels
(e.g. coutnryh of origina, name and address of
the manufacturer/producer, a description of the     Quotation
contents or ingredients, weight, conformity with
technical standards or inspection requirements      A quotation is a legally binding document by
etc. ) Failure to provide the proper labelling      which your firm can respond to an unsolicited
could result in goods being stopped at the          order from a potential foreign buyer. It
border of the target market. Usually,the buyer      represents your commitment to delivering a
will specify the type of labelling or marks         particular product or service at a particular
required for the destination country, but a         price and time, on the terms specified in the
freight forwarder can give you the same             quotation. Going back on that commitment
information. Customs brokersin the foreign          could damage your company's reputation and
country will also be familiar with the specific     it could involve you in other difficulties. That
labelling regulations required by customs           is why it is important to be careful in how
inspectors.                                         you prepare your quotation.

Packaging: Distinguish between packaging            By common agreement among international
(which pertains to individual products) and         traders, there are certain types of information
packing (which covers the way in which an           that should go into a quotation. These include:
entire shipment is assembled as cargo. Be           a description of the goods or services being
careful to familiarize yourself with packaging      offered the price (and details of how it is
requirements for your product in the target         calculated) details of how the offerings is to
country. Regulations may call for a product type    be packaged what insurance coverage will be
to be individually packaged, or packaged in         provided how it will be shipped and by whom
specific quantities (e.g. by the dozen). Certain    when and where will delivery be made what
types of packaging (e.g. plastic bubble wrap)       documents and invoices will be issued who will
may be required. Other types of packaging my        decide that the order has been fulfilled correctly
                                                    how payment should be made.

A quotation that does not contain all of this                               Once you have filled out a quotation, take time
information in sufficient detail will raise a lot of                        to think about the deal you are proposing. Ask
questions about the transaction and could delay                             yourself the kinds of questions listed in Task 5
the time it takes to come to an agreement. If                               before you actually send the document to the
certain issues are not spelled out clearly at the                           prospective buyer.
outset, there is a possibility that differing
                                                                            Below is a template that can help you through
interpretations can cause disagreements later on.
                                                                            the process of preparing a comprehensive
That, in turn, can delay payments or harm                                   response to the unsolicited order.

The description of the goods must be clear and                              regular, economy etc.). .If the product contains
specify the type of goods, make, quantity and                               third-party components they should be
how that quantity is expressed (i.e as units, by                            specified.
weight, by number, by set etc.). Specify if there
                                                                            Internationally accepted nomenclature should be
is a specific quality standard such as an
                                                                            used wherever possible and local jargon avoided.
inspection grade, or product type (deluxe,

                                  Details                                                      Terms Offered
Name of Product
Make Identifier (e.g. serial numbers)
Quantity (and unit of measurement)
Quality (grade, type)
Components (if any)

The seller should specify how a price is                                    with special packaging, shipping, insurance,
calculated (ie. by unit, by weight, by grade,                               payment of customs, or any special fees for
etc.). This should then be combined with the                                which the seller may be responsible. This should
amount to yield a price for the goods.                                      all be added together to yield the total cost for
Additional charges should be broken out and                                 the order. The currency of the payment should
detailed. These can include costs associated                                be specified.
                                  Details                                                      Terms Offered
Rate (price per unit)
No. of units
Price of units
Additional charges (packing, shipping, insurance, customs, or fees, etc.)
Total cost

If the goods carry labels, what language will the                  q   How will the goods be packed for shiping
labels be in. What information is contained on                         (crates, pallets, containers etc.)?
the labels.                                                        q   Are the goods fragile?
 q   How will the goods be packaged (Type of                       q   Do they need refrigeration, low humidity etc?
     wrapping: boxes, shrink wrap, etc?
                                                                   q   Do they require special handling (ie.
 q   Packaged by wieght, by single units, by                           explosives, chemicals)?
                                   Details                                              Terms Offered
Language of labels
Contents of labels
How will goods be packaged
How will goods be packed for shipping (pallets, containers etc)?
Special handling (fragility, climate control, etc.)

 q   Who will be responsible for insuring the                      q   What type of insurance is required (to cover
     shipment? (Can specify here what insurer is                       accidents, spoilage, confiscation, all perils etc.)
     to be used and from which country).                           q   How much insurance will be taken out?
                                                                       (How much of the transaction will be covered).

                                   Details                                              Terms Offered
Who will arrange for insurance?
Type of insurance?
Amount of insurance?
How will goods be packed for shipping (pallets, containers etc)?
Special handling (fragility, climate control, etc.)

 q   How will the goods be shipped (ocean, air,                  q   Who will make arrangements for shipping
     rail, truck) and by what route?                                 (buyer or seller)?

 q   Who will choose the carrier? (Some                          q   Where are the goods to be shipped from?
     governments will specify that their national                    To what destination (city) are they to be
     carriers be used).                                              shipped.

                                 Details                                             Terms Offered
Mode of transport
Shipping arrangements
Who will cover shipping costs?
Place from which shipment will be made?
 Destination of shipment?

On what date will the seller ship the goods? On                 installment and the dates for each should be
what date are they to be delivered to the                       specified. To what place (address, name, other
intended destination. If the shipment is to be                  coordinates) are the goods to be delivered?
made in installments, the amounts in each

                                 Details                                             Terms Offered
Date goods shipped (specify if partial shipments and dates)
Date to be delivered (specify if partial shipments and dates)
Place of delivery

 q   When will the seller's invoice be sent (prior               q   Will it be sent with the shipment?
     to shipment, with shipment, after)?
                                                                 q   Will other document be required (consular
 q   How will it be sent (separately by air, cable,                  invoice, inspection certificates, other licenses or
     mail, fax, etc?                                                 permits?) and if so, will the seller providethem?

                                 Details                                             Terms Offered
Date of invoice
How invoice is to be sent
Other documentation

 q   Who accepts the order when it is delivered             q   How will the order be inspected and verified?
     (the buyer, a customs broker (specify name),
                                                            q   Who will decide that all the terms of the
     the seller's agent (specify name)?
                                                                transaction have been fulfilled?

                                 Details                                       Terms Offered
Who will receive the order?
How will quality be verified?
How will other terms of the order be validated?

 q   What financial instrument to be used by                q   Is payment to be made in a lump sum or in
     seller (letter of credit, bill of exchange, etc.).         installments?
 q   When is payment to be made (upon delivery              q   If in installments, when are they due? To
     to the destination, upon acceptance, or at                 what institution (usually the seller's bank) is
     some other specified time)?                                payment to be made. Specify name, address
                                                                and account number.

                                 Details                                       Terms Offered
Financial instrument to be used.
When is payment to be made? (specify if in installments)
To which bank? (details of seller's bank, account number)

Feasibility Test                                     q   What are the other potential benefits to
                                                         your firm such as using up spare capacity,
Once you have completed the quotation, and               developing a foreign partnership, testing
before you send it, you should look closely at           a market etc.?
the deal you are proposing before you send the
quote to the prospective buyer. Even though          q   Are there significant impediments to the
it may be profitable, it may still not make              deal in the form of local trade barriers,
sense in terms of the time and effort involved           distances, regulatory restrictions, logistics
in achieving that profit, or in terms of                 and the like?
opportunities you may have to forgo in order         q   How risky is the deal? Do you have any
to pursue this deal. Before you commit to the            information about the foreign buyer? What
negotiation, ask yourself the following questions        happens to the deal if there are fluctuations
in order to evaluate the feasibility of the              in exchange rates between Canada and the
proposed transaction and get a sense of                  target country? How likely are such
the terms you should be asking for.                      fluctuations?
 q   How much time will the deal take?               q   Are there any political risks involved?
 q   Do you have the internal staff to               q   Are special inputs (materials, components,
     take on this project?                               etc.) required for the deal?
 q   Would you have to get additional                q   Are special skills required (language.,
     help to carry it out?                               cultural familiarity, expertise in logistics,
 q   What would be the impact of fulfilling the          etc.) to perform the transaction? [This can
     order on the firm's other operations?               serve as a point to where to get these skills].

 q   How much will the deal cost (in terms of       If the answers to these questions suggest that
     staff time, material costs, financing, and     the deal is more complicated than at first
     other charges)?                                thought, you may wish to adjust the price
                                                    upward. If the deal looks extremely complex
 q   How much does the company stand to             and time consuming, you may wish to cut your
     make on the transaction?                       losses now and abandon the project altogether.
 q   Would the deal require financing,              If, on the other hand, the potential benefits in
     and if so, can the company get it?             terms of revenues, market position, use of spare
 q   What would be the impact on other              capacity or other factors, tend to exceed the
     operations of securing additional              probable costs, then send your completed
     financing for this deal?                       quotation form to the prospective buyer and
                                                    move on to the next step in the process.
 q   Would it preclude getting other types of
     financing that the company might need
     for other operations?

Do not assume that your initial quotation will be          profits, costs and overall feasibility. Also, before
accepted in its entirety. With so many different           agreeing to any changes, make sure you get the
factors affecting the shape of a deal, it is to be         agreement of the divisions within your
expected that the prospective buyer may wish               organization (manufacturing, inventory, shipping,
to alter your terms. They may need the product             finance etc.) that may be affected by the new
delivered more quickly than you suggest. They              terms. You may have to go through several
may try to talk down the price. They may require           iterations before both sides are satisfied with
a specific type of packing for the shipment, the           all of the terms of the proposed transaction.
use of a particular mode of transportation or a
                                                           You can use a negotiation template to help you
specific carrier. When you prepare a quotation,
                                                           in your discussions with the foreign buyer. The
you are putting everything on the table for review
                                                           following is an example of how the negotiation
and negotiation.
                                                           template can be used to keep track of how
If the prospective buyer alters any of the terms           various terms are changed as the quotation
of the proposal, think about what that does to             passes back and forth between the parties:

               Our 1st        Their           Our 2nd
   Item                                                         Their Response               Final Deal
               Quote         Response          Quote
   Price         100            50                 90                 75                         80

                            We ship to                       We ship to customs         We ship to customs
                                               We ship
 Shipping They ship            final                         shed. They ship to       shed, they ship to final
                                               to coast.
                            destination                       final destination.            destination.

                They      They approve,     We arrange,        We arrange, they          We arrange, they
              arrange.     we arrange.      they approve           approve                   approve

This negotiation worksheet is based on the                 progress of the negotiation. This template
quotation template you filled out to prepare               can help you keep track of the offers and
your first offer to the foreign buyer. The first           counteroffers that may be involved in the
column of this template contains the terms                 negotiation process. Once both sides have
specified in your quotation. Columns will then             agreed to all the terms, the final column can
be added to this initial offer to chart the                be used as the basis for drawing up a contract.

                                                 DESCRIPTION OF GOOD OR SERVICES
                               Item                              Terms Offered / Counter Offer/ Acceptance
Name of Product
Identifier (e.g. serial numbers)
Quantity (and unit of measurement)
Quality (grade, type)
Components (if any)

                               Item                              Terms Offered / Counter Offer/ Acceptance
Rate (price per unit)
No. of units
Price of units
Additional charges
(packing, shipping, insurance, customs, or fees, etc.)

Total cost

                               Item                              Terms Offered / Counter Offer/ Acceptance
Language of labels
Contents of labels
How will goods be packaged
How will goods be packed for shipping
(pallets, containers etc)?

Special handling (fragility, climate control, etc.)

                                Item                             Terms Offered / Counter Offer/ Acceptance
Who will arrange for insurance?
Type of insurance?
Amount of insurance?

                            Item                                     Terms Offered / Counter Offer/ Acceptance
Mode of transport
Shipping arrangements
Who will cover shipping costs?
Special handling (fragility, climate control, etc.)
Place from which shipment will be made?
Destination of shipment?

                             Item                                    Terms Offered / Counter Offer/ Acceptance
Date goods shipped (specify if partial shipments and dates)
Date to be delivered (specify if partial shipments and dates)
Place of delivery

                             Item                                    Terms Offered / Counter Offer/ Acceptance
Date of invoice
How invoice is to be sent?
Other documentation

                                                ACCEPTANCE AND VALIDATION
                             Item                                    Terms Offered / Counter Offer/ Acceptance
Who will receive theorder?
How will quality be verified?
How will other terms of the order be validated?

                             Item                                    Terms Offered / Counter Offer/ Acceptance
Financial instrument to be used.
When is payment to be made (specify if in installments)
To which bank (details of seller's bank, account number)

The Contract
Once both sides have agreed to all of the terms of                             both comprehensive and legally binding. It is
the transaction, you are ready to proceed with                                 also important to specify what mechanism will be
drawing up a formal contract. The contract will                                used to resolve any disputes between the parties,
require some additional pieces of information that                             should these occur.
were not part of the original quotation but that
                                                                               Below is a contract framework for your
are necessary to provide an appropriate legal
                                                                               transaction, which you can use in your discussions
framework that protects both parties.
                                                                               with your legal advisor. The framework will
International trade transactions differ widely, so it                          include a record of the terms to which both sides
is not possible to design one standard contract to                             agreed during the negotiations and it can be used
cover all cases. It is advisable to get legal advice                           to guide your lawyer in drawing up a legally
to make sure that the final agreement is                                       binding agreement between your company
                                                                               and the foreign purchaser.

                                                          DESCRIPTION OF GOOD OR SERVICES
                                  Details                                                       Terms
Name of Product
Identifier (e.g. serial numbers)
Quantity (and unit of measurement)
Quality (grade, type)
Components (if any)

                                                            PARTIES TO THE AGREEMENT
                                  Details                                                       Terms

                                  Details                                                       Terms
Rate (price per unit)
No. of units
Price of units
Additional charges
(packing, shipping, insurance., customs, or fees, etc.)

Total cost

                             Details                                        Terms
Language of labels
Contents of labels
How will goods be packaged?
How will goods be packed for shipping
(pallets, containers etc)?

Special handling (fragility, climate control, etc.)

                             Details                                        Terms
Who will arrange for insurance?
Type of insurance?
Amount of insurance?

                             Details                                        Terms
Mode of transportation
Shipping arrangements
Who will cover shipping costs?
Place from which shipment will be made?
Destination of shipment?

                             Details                                        Terms
Date goods shipped (specify if partial shipments and dates)
Date to be delivered (specify if partial shipments and dates)
Place of delivery

                             Details                                        Terms
Date of invoice
How invoice is to be sent?
Other documentation

                                             ACCEPTANCE AND VALIDATION
                         Details                                         Terms
Who will receive the order?
How will quality be verified?
How will other terms of the order be validated?

                         Details                                         Terms
Financial instrument to be used.
When is payment to be made? (specify installments)
To which bank (details of seller's bank, account number)

                                                REGULATORY COMPLIANCE
                         Details                                         Terms
Licenses and permits

                                                     LEGAL FRAMEWORK
                         Details                                         Terms
Which country's laws govern the transaction?

                         Details                                         Terms
What institution or individual will arbitrate
any dispute?
Arbitration procedures?

Order Fulfillment                                   MARKETING
Once an agreement has been reached, your next       Inform marketing of the contract, size of order
task is to alert those in your firm who have        and pricing. Give them details about the buyer
a role to play in implementing it. Generally        for follow-up.
this will involve the same divisions that were
contacted in Task 1 (Internal Research) to          SHIPPING
provide input in the preparation of the              q   How many units are to be shipped?
quotation.                                               On what date. To what destination.
At this point, you should go back to the same        q   What modes of transport are to be used?
divisions to inform them that a deal has been
reached, provide them with the terms of the          q   What labeling and packaging requirements
agreement, and make sure that they understand            are there?
and agree to the role that they are to play in       q   Any special requirements (e.g. refrigeration,
implementation. Below is a list of items you             fragile packing, etc.)?
may wish to include in your agreement
with the foreign purchaser:                          q   Who is providing documentation?
                                                     q   What kind of insurance is to be purchased?
                                                     q   For how much?
 q   How many units are expected from
     inventory?                                      q   Who will provide it?

 q   When?                                          FINANCE
MANUFACTURING                                       Instruments being drawn up (invoices, bills of
                                                    exchange, letters of credit, etc.). Details of
 q   How many units are to be produced?             purchaser's bank.
 q   When?                                           q   Is any special financing needed (e.g. to cover
Specify any additional inputs required to satisfy        seller's operations until payment is received)?
the order. Specify any product modifications.        q   If so, who is providing it?
                                                     q   What needs to be done to secure it?
                                                     q   Any other special arrangements?


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