NON CIRCUMVENTION NON DISCLOSURE AGREEMENT
NCNDA serves no purpose in this business. The PCT is bound by confidentiality matters via the contract. Bill form USA is asked to produced a NCNDA to TIM in Africa , before he is prepared to disclose matters of supply or end buyers to TIM who is acting as a Principal Buyer and Seller. This sort of process is simply a waste of time, and does not protect TIM from anything let alone circumvention. It’s a futile incorrect exercise to seek a NDNCA . TIM is unable to trade as a PCT and in general he is likely to be a ill informed intermediary. This most often means TIM has nothing to offer anyway. A PCT must avoid dealing the with the Tim’s of this world - otherwise the PCT will become what TIM is - an ill informed intermediary . The legal cost to take on a breach of a NCNDA when no financial loss is proven could cost an intermediary big dollars to defend in an international tribunal or court and take year just to hear the matter. There is no financial loss for surrendering information about a supplier or end buyer to another ill informed trader who later circumvents everyone involved. Is Bill going to leave USA , find Tim, break into his office and secure the evidence needed to prove he was circumvented. Will he go to TIM’s bank and ask for bank statements which he wont get without a warrant.And lets say Bill has secured excellent evidence to prove he was jilted by TIM. To launch legal action in TIM’s country could cost more than the amount being claimed via circumvention and take up to 7 years to hear- Yet, there are still a few ill informed traders who are blind and ignorant of the facts. Even if Bill wins and is award lets say US$ 200,000 dollars; he will need to launch legal action to secure such funds from a citizen located in another country.We deal in international contracts so as to secure international acceptability.To date we have scoured our extensive files going back to 1998 to find one case where an breach of a NCNDA challenge was thrown out, let alone being heard.
All transactions initiated by a PCT carries with it a learned and applied trading routine, which must remain ‘within the bounds of the doctrine.’ Making poorly scabbed offers, cancelling them, reissuing such again, in where 4 or 5 copies of a contract were produced along with hundreds of emails can all come to a head in a dispute arising , if the deal goes through where later the end buyer produces documents or comments made, that you thought were dismissed earlier in where the end buyer is making a claim that the document is valid, and that the seller has breached performance. The type of document that the buyer would like to reintroduce into the standing deal that has already past contract stage in where revolving deliveries have eventuated. It may be that a previous offer created a better price and now the end buyer has reintroduced such an offer by arguing that it’s the standing offer. Fragmented documents means there are too many bits and pieces of documents and e-mails generated on one deal before that deal was formalised, so much so that the end buyer is using such for its own benefit in obtaining a better price even after the contract has been signed, under the threat that the end buyer may disrupt the deal or pull out of the deal fully. The PCT is required to adhere with protocol and routine and refrain from generating fragmented documents and emails that are constantly changed and amended. i.e: An offer may be accepted or rejected. If it is rejected the term of the new offer is discussed and reissued if possible ONCE only. Failing to accept the 2nd offer means no third offer will be advised at the behest of the end buyer unless a deposit is first paid. Fragmented documents must kept to an absolute minimum. I.e: The offer is released with a 7 days validity. The offer is returned 4 days late as accepted. The PCT rejects the offers issues an second offer with a 3 days validity.It’s returned 5 days late. It’s rejected and no new offer tis given as the end buyer is dismissed and the next one inline is tested, while supply is apparent.
If an experienced PCT is going to transact on a CIP or CIF transaction the best course of action is to apply the variant of “C” ( commission) to the delivery mode. This means the PCT must ensure its profit, commission payments made, and operating expenses are all covered within a 5.0% range or less of the final selling price where ‘C’ is added to the delivery mode. If goods cost lets say $100.00 per MT at CIF&C as sold to and end buyer and even though the international price for such goods is $120.00 per MT, the PCT has incorporated the sell price to include 5.0% or less ‘commission.’ This means the purchase price of goods by the PCT from the supplier is between $95.00 and $100.00 per MT in where the end buyer gets the best possible price.The invoice has to show the entry of commission as a separate expense. This is important as declared commission payments do not attract imports taxes and tariffs normally applied to the goods. The PCT must secure 115% insurance cover from the supplier, 110% of which goes towards covering the end buyer goods in case they goods are lost at sea. The remaining 5.0% is for the benefit of the PCT. This means if the goods were secured at a heavily discounted price $70.00 per MT it can only be sold for as high as $73.50 per MT , even though current international prices suggest they are worth $120.00 per MT. This is the adverse aspect of conducting a CIF&C deal in that the end buyer receives most of the discount and that even though the PCT could have sold the goods for $100.00 per MT, it would not be able to collect on the difference of $30.00 per MT as the documents presented to the bank at collection time has to comply with ICC international banking rules of issuance and collection, even if the goods are not lost at sea. Then insurance cover taken must reflect the sell price to include ‘all expenses’ of the PCT ( defined as Commission). Where a supplier may agree to secure 115% insurance cover it will not agree to secure ie: 125.00% insurance cover.
FTNX ‘AID’ DELIVERY MODE: ALL INCLUSIVE DELIVERY (AID 2020)
THE END BUYER SIGNS A CONTRACT AT FTNX AID
Occasionally a deal comes across where the end buyer simply wants the goods delivered ASAP without all the issues of pertaining to such a delivery. In this light FTNX pays for all delivery cost up to the point the vessel unloads goods Port of destination. The end buyer needs to only pay for all matters of import as assessed by customs. If collection on the financial instrument occurs at POL, that’s one price. If collection on the financial instrument take place once goods are unloaded, thats another price. FTNX in-house delivery modes AID is designed to assist buyers with one complete price payable as agreed upon at that time.
A typical FTNX In-house created delivery term. FTNX is to supply the goods with all expenses paid up to the ships ‘first line’ being attached at an allotted wharf, port of destination.
All expenses to do with;
- Cost of Goods
- Cost associated with presentation documents
- Loading expenses
- Pre Shipment Inspection
- Insurance cover ‘A’
- Commission Payments
- Unloading ‘over ships rails’ expenses
- Late delivery Discount/rebates may also be offered
Under FTNX AID delivery mode, the only matter that the end buyer will need to enquire about prior , and settle, are import duties and taxes
IN–HOUSE TERM USAGE
The PCT applies in-house terms of usage when dealing with string members only, such terms which must not be used in International business arena outright ( we are now seeing our invented terms such as RFQ or OTS being used externally) as such terms are not Internationally recognised terms but once applied to a contract, the terms of the contract has legal force. FTN exporting has developed and created many new in-house terms of trade which are now incorrectly appearing in international transactions. In house terms do not have the same protection as have universal rules and laws of trade and of the seas. A supplier or end buyer using FTN exporting in-house terms raises suspicion towards intent. A PCT applies international trade terms proper when dealing with a supplier or end buyers and uses in-house terms when dealing with peers as the FTNX doctrine or trade is a universal application carrying uniformity in an effect to harmonise the intermediary & trade industry to abide by a set of standards and principles. When an in house term moves from the peer to peer aspect, FTN Exporting adds the term on the offer and contract, in where is becomes a part of procedures, within the bounds of the doctrine. Only FTNX has governance over the Doctrine of trade we have created, and is able to add or remove such term usage. In house permanent usage terms: Examples : RFQ (Request for a Quote ) OTS ( Offer to Sell) AOS ( Assurance of Supply) The term LDD ( Late Delivery Discount ) and IPG (A Promissory Note ) are typical in-house terms that we have allowed to transversed into international arena, as has the term PPIC (Policy Proof of interest Certificate) and PCT in where such in-house terms fits ‘within the bounds of the FTNX doctrine.’ In-house terms when used must still be able to be added for use to the FTNX universal trading application, for such terms to work effectively.
IRREVOCABLE CORPORATE PURCHASE ORDER: This is not an international trade term and should not be used. Often seen used by ill-informed Traders. Appropriately used often in the USA as a localised or interstate business practice. A Professional Commodity Trader (PCT) signing an ICPO in the same USA State as a USA supplier who fails to perform locally or interstate go could find themselves in serious legal hot waste due to the terms ’irrevocable.’ ICPO is used to describe the business of Interpol ( International Criminal Police Organisation)
Assurance of Supply; is an offer made by a supplier to the PCT assuring that the goods being offered will be available over the longer terms and that should the pCt close on such a deal, the supplier guarantees supply as indicated on the AOS. FTNX created this aspect which other entities have emulated.
A person acting on behalf of a disclosed principal is a broker. I.e: working for an insurance company, Brokerage firm..etc..etc.
An (ill-informed) intermediary, in general, is neither an Agent, Broker or Principal. Such is a person undisciplined in commercial practices who acts as a third party in a three-party deal in where a reward or commission is offered to the person who surrenders vital information to a principal that leads to a deal closing ; or others in return for a payment. An opportunistic person, attempting to secure a commission in an ‘ad hoc' manner. An ‘informed’ Intermediary who later turns ’professional’ after time spent in study and practices is defined as an independent ‘Buyer’ or ‘Seller.’ In International trade business, there is no scope for ill-informed intermediaries to exist let alone trade effectively. Once the uniform study has been completed (3/4 months) the intermediary tag is replaced with the terms ITS PCT. This is important, to ensure that the PCT is not seen as being associated with ill-informed intermediaries. An SI is a sourcing intermediary who has studied the FTNX doctrine of trade and has yet to take up the Professional Commodity (PCT) Traders status. A P.A is a primary agent nominated by the PCT heading a deal as a principal ( buyer/seller) who looks after SI's in an active string. The SI pass information to the P.A who check it and advises the SI as needed. The P.A then forwards string information to the PCT heading the deal.This method ensures the PCT is able to concentrate on the deal in hand , while the P.A concentrates of looking after enquiries made by SI's attached in an active string deal with the PCT.
A device-generated ‘Message Text’ (MT) where the open aspect of such, allows one bank using Internal secure means; to send a message to another participating bank worldwide. MT 799 Is not a text related to the issuance of a DLC, ( and yet we see this mistake the most often) but merely an ‘advice’ being served from one bank to another. I.e: a ‘Bank Comfort Letter’ is being electronically advised stating that the Buyer is RWA to the bank of the Supplier. It does not mean that the Buyer will ‘buy’ anything, nor does it binds the buyer to perform. BCL cannot be used or issued by the PCT as we are traders not end-users of the products we buy and later sell.
In international trade business, ‘LOI’ stands for ‘Letter of Indemnity and not ‘letter of intent.’ The LOI serves no value in this business.
ANY SAFE WORLD PORT: Incoterms requires that the named port of destination must be indicated so that an accurate assessment of carriage rate can be served. Offers carrying ASWP may also indicate that the goods have been ‘marked up’ dramatically as well. What is indicated when such a term is applied is that the trader is ill-informed. Import Customs will not tolerate such aspect either. World scale rates are used when assessing freight values.
PROOF OF PRODUCT (POP)
When a document is produced purporting to indicate a previous sale, it’s usually served to try and convince a buyer that the ‘goods are real.’ The only indication that must be drawn from such a presentation is that an ill-formed trader is making the approach and offering such ‘proof’, when in fact, no proof is apparent, may be immediately assumed. This kind of‘ proof’ is treated as rubbish and must never be accepted as evidence in any form. Product is proven once loaded- to its quality. Evidence of the ‘supplier able to verify the sellers goods’ is served accordingly if such is offered on contract only.
THIRTY (30%) DEPOSIT
No funds must ever be presented upfront in any form whatsoever under any circumstances of a legitimate first-run deal being sealed. If anyone asks for any money upfront, being it a deposit, fees, charges or the likes; RF the deal immediately. Having said that Chinese ‘Traders’ will often ask for a deposit upfront; but after a first challenge after serving the trader a quick lesson on acceptable safe procedures, they soon come to understand that their requests are one that a scam artist would make. Legal Frustration occurs when a buyer has shifted the deal so far on each demand made, in where a third offer has been produced, the offer may accompany a demand for a performance deposit, is the time such a deposit may be sought. The type of deposit that will stop another offer from being issued is where if the buyer fails to enact on the deals the deposit is forfeited. In one case t it was discovered that the china based trader wanted 30 % deposit upfront, so it could offer the supplier 20% deposit when placing the order (ensuring that the supplier will not knock back the order presented by an ‘opportunistic’ broker .) in where 10% was for personal earnings; earnings that have yet to be earned.
BANKS AND THE CONTRACT
‘Please advise contract to our bank’ means’ a Rubbish fodder (RF) deal in apparent. Banks have no part in the matter of the contract. Banks deal in finance, not products. This is a major rule under universally applied UCP 600 Banking rules. Suppliers must always beware of such a request from a person calling themselves ’ buyer’
Buyer beware! An SLC is never used to pay for goods and a deal is dropped if this payment instrument is sought. An SLC can be transferred many times or not transferable at all, depending on the rules supporting its issuance. An SLC is ideal for using in support of a P.G or when paying rebates, fees and commissions. A DLC is a conditional instrument meaning that certain conditions must be met before collection can apply. This makes the DLC a deferred payment application. An SLC however bears an unconditional aspect where the production of a drivers license proving I.D may be all that is required to initiate collection– instantly.
PERFORMANCE GUARANTEE (PG)
The buyer must always issue the financial instrument to pay for goods first. The supplier counters this act with the issuance of an SLC in support of a performance guarantee–when such a P.G is offered. This aspect MUST never be applied the other way, useless one is keen to lose their money and the deal. We won’t elaborate more on this part in case scam artist are reading this site. A supplier must never offer a P.G first on the lure of a lucrative deal, is our clear advice. The P.G is only forfeited if the supplier through his fault failed to have goods at the port to enact delivery on time. The term ‘BOND’ is ugly and should not be used.
OFFER (LETTER OF OFFER)
The mainstay of any international trade transaction is the well-defined offer. Unless stated differently on the offer itself, in International trade the offer once signed is accepted as legally binding. From the supplier it's called an offer, from the end buyer or PCT it’s an ‘Offer to Procure.’ The offer is the bedrock as such supports the whole deals’ and destroys the deal if presented ambiguously. An offer is presented in an expressed formatted pointed letter style using Georgia, Times or Arial fonts. The is a legal contract without an offer first being signed as accepted.
A quote is ‘confirmed’ rather than accepted and has no legally binding spect like that of the offer. A quote is a good document to serve as the deal can be tested with a supplier or end buyer long before a deal moves into ‘deeper waters.’
‘Ready Willing and Financially Able’ is a Bonafide trading aspect. The buyer must have funds secured before placing an order rather than before considering placing an order. The supplier must have finances in place to export goods being sold. Just like a PCT, the buyer must open a bank account to handle the DLC aspect of the business; but if a buyer is looking to finance an export deal, then the loan application has nothing to do with the underlying import contract itself. When the end buyer has become RWA it means that the PCT has received the required DLC to pay for goods; until, this happens no RWA is apparent as per the perspective of the PCT.
FTN EXPORTING definition for purpose of clarity and study. The entity who has ‘as owner possession of export ready goods and the property in them ‘ who makes the offer.
FTN EXPORTING definition for purpose of clarity and study. The entity whom ‘a buyer paying for and taking possession of imported goods and the property in them.’
FTN EXPORTING definition for purpose of clarity and study as it applies to the emerging industry it has created. Professional Commodity Trader (PCT) is neither intermediary, broker agent supplier or end buyer, but a highly informed, experienced, disciplined, and educated professional ‘Buyer or Seller’ of commodities at any given time who are also specialised at what they do; who has developed a skill set to flip over a contract from one side to another using a legal and lawful application to do so under a set of standards, rules and laws. FTNX doctrine of trade harmonises the practice of the intermediary to a uniform universally accepted basis. A person undertaking the principles of leverage and arbitrage. A PCT instigates the deal thus cannot be deemed to be an ‘Ad Hoc’ intermediary nor an ISS member. A PCT is therefore a ‘first party trader ‘ and principal in their own right. The intermediary take is removed once the FTNX study has been completed and replaced with the term PCT. A PCT is also deemed an International Trade Specialist (ITS)
A right to keep possession of property belonging to another person until a debt owed by that person is discharged. Usually, an unseen aspect found in ‘many places’ when applied in International trade matters, in particular to (carrier) rights to sell goods for unpaid freight. In 2018 a new aspect has become apparent in that a lien should not be relied upon the applied against goods which at one moment are apparent in where when such goods once used, destroys the lien attached. A lien thus should not be deemed to stand on the same platform as other types of offered security or collateral.
RULE OF LAW
Simply described; All laws are rules but not all rules are laws in that; the supreme rule of all, is the law; to which –nobody is above the law.In Trade the same rule applies, even to countries where the rule of law is replaced with authoritarian rule. In international trade, localised laws must give way to trade rules. Democratic /Flawed democratic/ hybrid Republic countries mostly apply the rule of law.Such countries are often deemed as progressive countries.
Terms used by the issuing bank of the end buyer to ‘visually sight’ delivery documents at ‘presentation time’ before payment is released to the seller or supplier in where any anomalies can stop payment until the issue(s) is resolved or; a waiver from the end buyer is provided to the bank as indemnity against legal action. Only matters applied on the terms and conditions on the DLC and not contract are checked ‘at sight ‘ and affirmed based on a set of protocols and rules that must apply before the collection process may proceed. i.e: A Charter Party BOL is presented where under UCP rules the bank of the buyer can only accept the more secure and costly Shipowners BOL etc..etc.In where the credit terms require a PSI certificate to be issued by SGS in where a BOV Certificate is provided instead will require a waiver from the buyer before payment can be made. Many such aspects must be apparent; is the added security feature using UCP IDLC. When a document does not comply or has been altered it is said not to be presented in an ‘unclean’ state. The waiver is best avoided at all times as the waiver ‘opens the door’ for the buyer to make added demands contrary to the contract basis.
The delivery of original documents and not the physical goods when presented cleanly activates the collection process. Even at DAP Incoterms; and even though delivery of goods must apply to an agreed place, often at buyers factory in another country, the documents supporting such are still required to be presented in a ‘Clean’ stated before collection process may apply. In FOB, CFR or CIF, once the goods clear the ship's rails in good condition port of loading the risk pass to the end buyer who now owns the goods. Again we have seen many stupidly inspired interpretations of the delivery aspect. The supplier wants to be paid before the goods being sold no longer belong to him. How clear is that? No supplier in their right mind will allow a DLC or payment to be lodged after the goods have arrived at the destination port. It’s just common-sense., regardless of the payment method used. To do so means the end buyer can obtain the goods and the supplier never paid. There is not even a claim for payment if the end buyer takes the goods and converts them to another product before payment is collected.
The first delivery date confuses many. A supplier must know if they can or cannot meet a first delivery date when an ‘offer to procure’ (OTP) is advised by a PCT , or when an ‘offer’ outright is served to the PCT from the supplier.If lets say, it takes 5 days to issue a contract and the contract must be retuned within 21 days in where the first delivery date is 30 days later on a FOB transaction ; the supplier would have more than 50 days to prepare for first delivery.Like wise an end Buyer who needs to book a ship, would need to make its first enquiry in doing so when the offer was advised.The end buyer needs to have the ship nearby the loading port ready for berthing at least a week before the first delivery date. If a end buyer declares it cannot secure a ship on time , then it should have conveyed as much, to the seller, prior to signing of the contract , so as to allow a new delivery date to apply. This is why long validity date of 90 days or more are sought when sourcing goods. FTNX often applies in normal times to end buyers that first delivery date is ’30 days’ after the signed contract is returned. In a Pandemic , first delivery 45 days after the contract is returned. The end buyer ought to check the availability of a vessel (shortage of carriers recorded and higher freight charges apply during a war or pandemic as form 2021) when the contract was advised. The end buyer must then book the ship and have it set demurrage at POD awaiting their turn, long before the actual first delivery date being prescribed.
CIP AND FCA
‘Carriage and Insurance Paid (CIP) and ‘Free Carrier (FCA) are used for FCL (Full Container Loads) sales and not FOB, CFR or CIF. Light product needing volume to initiate good weight often use 40 FT FCL. Dense material often uses a 20FT FCL. Both containers have weight limits imposed on them in where all because one can sell 20 MT of I.e: Copper Cathodes via a 20FT FCL. They will not be able to fill a 40FT FCL with 40 MT of Copper. All Containers have their TARE weight and the maximum net weight printed on the door. This does not infer that ALL Ports will, however, accept such weight. The supplier and end buyer need to be informed about such matters before the contract are sealed
Full Container Loads; come in all kind of sizes to include cradles and freezers (Reefers) and in where bladders are used for bulk liquids, and ‘Hot Tainers’ with heaters for bitumen. 20 foot and 40-foot lengths are more common lengths. 40 Ft Containers are often used when product carry volume but are light i.e: bales of wool, novelty items, mixed products.
CONTAINER FREIGHT STATION: Area near or alongside Port of loading or unloading inside customs control. One set of charges apply from the factory to CFS, and a charge for lifting and un-lifting to and from the ship, and another charge for storing, moving around, at CFS via a place of loading and unloading, deceptively makes up the full freight and delivery cost component, even though most charges quoted only refer to the ocean-going component only. Added costs about matters of Quarantine, Currency fluctuations, and late returns of the empty container to the CFS storage depot may also apply to produce a very large total cost of final delivery. In once case an entity was quoted US$ 3,000.00 ‘Freight’ charge, by a broker , for a FCL of furniture delivered to USA. His final bill at destination port totalled US$ 6900.00.
Lots of confusion applies to such matters often seen on speculative trading boards or industry advice in where if such boards or advice explained the processes they use better more investors would be secured. CIF Rotterdam, CIF EU, CIF Laverna.. etc. means to define that the goods ordered are delivered to named destination ports., where the end buyer arranges freight to destination. The Buyer is not receiving a CIF quote to the final destination but is being advised that the freight component in getting the goods to the named pickup port, will still need to be paid when the buyer picks up such good from such named ports/places. i.e: Freight component from Russian Port to Laverna, Italy. The freight component from the Russian port to Laverna is still payable, even though the goods are offered at FOB Laverna.
All major ports have berthing schedules where booked vessels are expected to arrive at a designated berthing time, where the ship can either unload or take on loads. If the buyer fails to have goods ready to load when Lay can is taken, the supplier loses its P.G.
NON BREAK CARGO: The rule here is one whole bulk carrier shipment, one BOL applies, as delivered to one port to one buyer, whereas 50 FCL, 50 different buyers and 50 sets of BOL’s are served to many buyers at the same POD (Port of Destination)
A charge payable to the owner of a chartered ship on failure to load or discharge the ship within the time agreed. Thus the ship has missed lay can and needs to ‘park offshore’ until the next berthing the is secured will also need to pay the cost of such delays accordingly.
Another misunderstood concept: A buyer states that they want to buy a product using a ‘Bank Guarantee’ in where no payment can be collected until the goods arrive at the destination as per CIF. The buyer is not understanding that if a seller is unable to obtain his money owning when goods are loaded on board a shipping port of loading, then it’s no longer (a) a CIF transaction but an ICC DAP Incoterms delivery mode and not CIF and that (b) Interest is also applied on to the agreed payment value as a premium and (c) a Guarantee in the form of an SLC should not be used for such a transaction. A Bank guarantee as advised by a bank in another country is a risky proposition and should never be considered as payment because laws and rules retaining this kind of Guarantee apply localised banking rules and laws. The correct credit is a DLC for delivery as DAP Incoterms. This one aspect assures that once the required delivery documents are presented, the supplier is guaranteed payment under the DLC once 30 days after delivery has completed. We have seen entities who should have known better seek such B.G. A Bank guarantee must not be used for the payment of goods.
Once the DLC is ready to be transferred, the advising bank of the PCT (the seller) will ask for payment upfront of the transfer fee ( ‘as agreed upon’ the offer and contract.) On revolving deals carrying large values, a transfer fee carrying ten of hundreds or thousand of dollars in value will be apparent. TF is paid by the end buyer as per the perspective of the PCT acting for undisclosed others, as the supplier and not the seller, is the beneficiary to the credit. The benefit to the PCT acting as a seller, occurs long after the delivery takes place, not when the DLC is transferred to the supplier. This is one of the reasons why the doctrine uses the term ‘supplier’ instead of ‘seller’ a term reserved for use by the PCT. Clarified Aspect : ICC incoterms and UCP banking rules, offers ambiguous advice on this matter and needs to clarify stated issues in a better light as it is obviously describing the rules as interpreted from the perspective of a supplier enacting directly with the end buyer. It failed to address this aspect when a seller (PCT) is apparent between the main parties. As precedence, as far as the PCT is concerned, the doctrine makes is clear with no confusion apparent, when a disclosed supplier deals directly with an end buyer via an agent of the supplier, the supplier pays for the transfer fee. As experience is gained, the PCT could seek the transfer fee from the supply side instead - on merit as relevant in some circumstances i.e : for instance; when no worthy discount on the price of goods is evident ‘as agreed upon’ at such a time when the offer to procure is advised by the PCT to the supplier. A risk exists that the supplier may not pay the TF, but as far as the PCT is concerned the issue is one of security as well. If the supplier pays for the TF, then the DLC can be safely lodged into a verified traceable account belonging to the person or entity claiming to be a supplier, the same account that issued payment of the TF, is the same account to receive the DLC. So there is merit is securing the TF from the supplier. The supplier pays for the TF for the PCT in return for securing the DLC makes logical sense as well . But! since its the end buyer who is issuing a DLC, then one who will do as much , will also pay for the TF if ordered products carry a good price; this aspect is about securing the TF in advance. As it stands under UCP rules, the ‘beneficiary of the DLC’ from the end buyer is the PCT- which is incorrect. In the first instance the end buyer must pay the PCT acting as seller, on his or her behalf, the TF– is the first correct course of action. Under no circumstances is the TF paid from the account of the PCT( form its own funds) the ‘presumed beneficiary’ to the DLC, is the main point in reference.
PIP: PANDEMIC INDUCED PROCEDURES
Another FTNX created aspect of trade bourn out of necessity due to the Covid 19 Pandemic; financially assisting its end buyers. The fact of the matter is that this pandemic will continue to cause deliveries to be late and very long delays at unloading port is costing end buyer a small fortune in demurrage fees. To assist the end buyer further , when PIP is applied to the offer made to the end buyer, the end buyer is allowed to open a revolving DLC for 8, 16 of 24 deliveries , but serve supply on contract for 12, 24, 36 etc.etc. months. The end buyer is assured long period of supply with a mitigation aspect attached. If the deal has turned to an adverse situation by the 8th shipment , the end buyer may walk away from the deal without breaching the contract ( no consequences) . The remaining 4 shipment may also be taken at this time where the remaining I.e: 4 payment are then lodged. This means the PCT can be late with 4 deliveries without penalty and where a discount Is offered on the invoice via the LDD aspect, for the price of goods if any of the I.e: eight remaining deliveries are late. Furthermore when PIP OTP by the PCT is offered no late delivery ‘Performance Guarantee” (P.G) will be advised by the PCT which is replaced by the LDD aspect as late deliveries are foreseeable foregone conclusions while this Pandemic is evident. In return , the PCT shall bear to split 50/50 any demurrage cost incurred by the end buyer port of destination.
PIP DLC CLAUSE
PIP MAY ALSO BE APPLIED/OFFERED TO MATTERS OF PAYMENT IS SOME CASES. When long term revolving contract 12 months of more is apparent , the end buyer may lodge one DLC payment as each shipment is delivered. A shipment of goods is cleanly delivered. The DLC is collected upon, within 7 days a new DLC for the next shipment is lodged into the account of the PCT .The end buyer does not need to open the DLC for the whole contract value but each shipment value . However a SLC carrying 95% of first shipment value for the life of the contract must always remain in in place supporting the issuance of the DLC to mitigate our contract obligations with the supplier. Should the end buyer not open the relevant and due DLC within the said allotted period, the SLC is forfeited and the Contract is cancelled due to the perceived ‘lack of action’ of the end buyer. No second chance to lodge an outstanding DLC is allowed once this aspect of the contract has been breached by 3 days. The SLC can only be collected for this specific reason. To enact this aspect the PCT will only accept a confIrmed and transferable DLC for each delivery.
DEFERRED PAYMENTS D/P
As for deferred payment, a Negotiating and Confirmed DLC must be secured and interest is calculated in the offer price. Here the supplier bank if accepted, will discount the value of the DLC and pay the supplier accordingly then collect the whole DLC value later when the bank seeks reimbursement. But the end buyer has to pay a higher rate if the seller is not going to collect on documents at a later date (D/A) or collects on such but defers collection. The Buyer is using the sellers ‘money to do business – hence such deals attract higher sell prices.
A barge or another vessel loading a mother ship offshore will produce a trans-shipped BOL, which is not allowed to be used under ta UCP DLC application is another security feature of using a DLC.
POOP: PERPETUAL OFFER ORBITING THE PLANET
This issue remains in place. In 2019 we are still receiving inquiries for goods offered 12 months earlier as submitted by ill-informed others. So a genuine offer once released even though long expired or sold can and will often travel around the world many times due to ill-informed intermediaries trading in such documents. This matter makes the work of legitimate PCT traders even more difficult.
This is an important date. If an offer is not returned on time, the basis of the original offer may change if a second offer is sought.The whole deal centres around the validity date. The whole deal can easily collapse when matters of ‘validity’ is breached.
While national news stories sensationalise such matters, In fact ‘scam artists’ have been around long before FTNX started in this business in 1988 when using a facsimile. Most scam artists use a non ISP services email address is a common feature. The other is the use of particular platforms such as ‘Facebook’ where scam artists conduct business openly to prey upon gullible victims. Scams involving romance, SLC financial instruments, drug trafficking, money laundering, compassionate requests for money, fake product..etc..etc..are common. In the commodity trading business as advised in the FTNX Doctrine of Trade, such matters are not an issue and easily discovered, if one follows its advice. An internet study offered in primary schools would reduce the ability of scam artist greatly. The Internet is a dangerous place, more so if one is naive. It’s not so dangerous when natters of due diligence are always apparent. In the latest scam, PCTs are targeted by person claiming to be a trading house, supplier or end buyer. An email is served asking the PCT to consider the order in where a document other than a PDF is served (usually the document ending with html or rar tag is common).The PCT using a PC (other than a Mac) clicks on the document only to have spyware installed.
ORTHODOX TRADING ROUTINE
Quote, Offer, Contract, DLC, P.G, Delivery, Collection, Next Delivery. Any strange requests of improper aspect or variants offered are dismissed. This is the basic formal and formidable safe trading aspect applying to any straightforward commodity transaction. Any demand for upfront payments or mention of incorrect terms of reference seen herein, the nature of business is dismissed.
The term ‘Proof of Product’ when asked for is another improper term. If an end buyer does not go, under an invitation, to meet the supplier and discuss business and sight goods in the suppliers country, no such POP is possible until goods arrive at the destination port. But even if an end buyer went to such a meeting it could lose the right to reject goods when they arrive at the destination port, because the end buyer has already seen and accepted the goods,’ when visiting the supplier. (Legal maxim: Caveat Emptor: Buyer Beware) This is why third party independent inspector is important. An End buyer sighting such goods, cannot possibly know what the inherited properties are ‘just by looking.’ Independent inspector however can, by conducting tests only ON THE GOODS being sold, and not as per goods sold to someone else previously as specified on some other buyers report. How it applies to the end buyer so does it apply when a PCT is offering goods. There is not valid issue nor valid evidence that the goods sighted at the port of loading will be the same quality of goods that will arrive. Independent experts must attest to goods at the port of loading. The PCT still has the discretion to service evidence of his ‘supplier’, even after the DLC has been accepted because the PCT is the ‘Seller’ under the law and is not required to provide such evidence; evidence for goods that the end buyer could not secure ( otherwise why use the services of the PCT) nor secure at the price offered by a PCT.
United Nation Commission of International Trade and Law is a body established by the UN to oversee the ‘harmonisation’ of international trade laws and processes. The FTNX doctrine has added matters addressed under UNCITRAL which add to made the doctrine a formidable study
The use of a DOCUMENTARY LETTER OF CREDIT (DLC) as endorsed under UCP rules as administered by the ICC Paris, France, is the safest payment advice one can use because it comes with a whole lot of conditions. that must be satisfied first. This is why an SLC MUST never be used to pay for such goods as an SLC has no or very few conditions to apply collection on such payment instruments. An end buyer who cannot open a DLC is deemed as not being an end buyer at all. A DLC is opened as ‘irrevocable’ meaning that the issuing bank will honour payments on behalf of its customer, the end buyer, even if the end buyer protests. Because there is a long period between issuance and collection, if the required transport documents are not produced, or do not comply, no payment can be collected. Furthermore, if it is found that fraudulent dealing is apparent, this is the one act that can cause the irrevocable status of a credit to become revocable instantly. When a contracting period is 60 days, any fraudulent dealing would be soon discovered in the course of the transactional basis. We have seen many stupidly ill-informed payment methods and excuses therein. As far as the PCT is concerned it cannot accept any other payment instrument but an IDLC carrying an at sight collection process.
UNIFORM COMMERCIAL CODE: USA
A great set of rules developed by American lawyers, copied by many countries in differing forms,( Uniform Commercial Code Japan etc.etc.) for use internationally at first and later subsiding for use in localised interstate commerce, applying USA Federal Administration. A PCT uses ICC Incoterms to deliver rules as these rules are now part of the global unification process with which most countries adhere.
If you have studied the FTNX doctrine, you are an informed PCT and a private commodity trader. One who is trading on documents and does not have goods being sold is an Informed PCT. A PCT must not deal with anyone applying as a routine in part or combined - improper trading terms such a ‘POP, ICPO, LOI, ASWP, SLC, BCL, RWA. To do as much may mean you are dealing with ill-informed entities and fake deals. A company may deal in any way they like, we cannot stop people acting foolishly, but an informed specialist private trader such as a PCT may not entertain or trade in such a manner.
Petroleum-Based Products: This is the term used in COSI to describe crude oil and refined products therein.
When ‘on the spot’ goods are priced lower than the forward price listed on an exchange. Mostly used in the PBP business. No for use by the PCT
When supply is short whether occurring naturally or intentionally by manipulating supply; the price of goods is higher than the forward price or bid. Used in PBP business. No for use by the PCT
Example: If the price of goods dramatically falls after the end buyer has purchased goods at a higher price; or let's say the price has skyrocketed after the end buyer has signed the contract, and many other aspects where a buyer or seller rather and a supplier or end buyer is involved in the deal, principal many attempts to break the contract using the term ‘impedance’ as a defence, I.e The end buyer will not accept the goods because it has been impeded by custom authorities, who have added a huge increase to import tariff rates which was not evident when the contract was signed..etc.etc. FTNX has developed a formidable contracting basis applied intentionally to avoid being challenged on matters of ‘ impedance’ which is directly related to matters of ‘performance.’ This is a big subject matter discussed further in COSI. One of the ways to ensure this aspect does not become an issue for the PCT, ( as the price of goods often creates the basis for breaching a contract) is to ensure that a discount on the price of goods is always evident, for large quantities, and that a fixed price basis is preferred over a variable price aspect. The other aspect is to ensure that the main obligation of the end buyer as stipulated on the contract and that the end buyer is to bear liabilities for failing to become informed about matters of importing ordered goods before the contract was signed; as so forth and so on. A PCT must adhere to matters of doctrine and procedures strictly, at all times, as such issues may not be readily obvious when a PCT is trading.
LEGAL FRUSTRATING EVENT IS NOT A FORCE MAJEURE EVENT NOR AN IMPEDING EVENT
(A) A carrier arrives at the port of destination and is unable to unload on time because the majority of workers have not turned up due to the Coronavirus Pandemic.
This is an impending event, which will have little chance of success if a claim to cancel the contract is attempted as ‘goods are being unloaded’ albeit at a delayed rate.
(B) The buyer signed a contract advised payment where the Supplier could not deliver the goods on the due date at port of loading due to an industrial dispute lasting 2 weeks
This could be deemed a Force Majeure event, however, the end buyer would not be able to cancel the contract for this reason alone, as the goods can be delivered once the strike is over.
(C) The supplier has loaded the ship when a change of Government occurred at the place of destination which has changed all aspects of importing goods, in total difference to the deal struck when the goods were sold.
This is a legally frustrating event that allows the end buyer to cancel the contract without recourse to consequences. The situation was so great as to change to what it was when the contract was sealed.
London Commission of International Arbitration has developed a system to settle disputes that can be used internationally. While the PCT when acting as the seller may select a suitable arbitration venue should a dispute between the PCT and End buyer occur, the fallback position of applying the highly respected and well used LCIA process on the contract is allowed and even preferred by the PCT.
TRIBE RULES OF ASSOCIATION (TRA)
Take all the procedures and processes offered in the doctrine and convert them to rules that a PCT can seek instant reference from as needed, defines what TRA is about. TRADE RULES FOR INTERNATIONAL BUSINESS AND ENTERPRISES (TRIBE) has been around online in one form or another since 2001 but became an extensive set of rules by 2010. Uniform application is one of the futures of the doctrine.TRIBE assist with this unification process where TRIBE mainly covers all the elements that most other publications have missed out on based on finding when trading, as experienced by the author over a very long period.
A lot of business is conducted in languages other than English, but ostensibly the universal language of business is English ( first suggested by FTNX) as a matter of international law. Ships master, Air control towers, Aircraft pilots, Major custom entry points, all communicate in English worldwide. A PCT conducts business as advised in the FTNX doctrine using the English language as well.
CONTRACT FORMATION LAWS OF ENGLAND AND FOREIGN TRADE
With 52 countries of the Commonwealth, England's contribution to the world of trade, law, insurance and international business goes back nearly 1000 years (Precedence). Even the trading road into China (was, and still is) was made possible via Hong Kong. In Hong Kong, English is widely used in the government and by the legal, professional and business sectors. Courts from all over the world use persuasive argument in support of decision arrived from English courts. Directly England’s influences in the matter of intentional law and foreign governance therein covers 40% of the planet. Indirectly the figure is nearly double. One of the business aspect developed by England is contract formation rules and matters of international agency. A PCT learns to use the same professional basis when conducting business. This is one of the reasons that the FTNX doctrine of trade is a formidable international business application. The six elements that must subsist in forming a contract are as follows.FTNX has never seen an entity worldwide that could not accept our procedures and contracting basis.
Contract formation rules must convey the follwing matters.
(a) The Intention (b) The offer (c)Valuable Consideration (d) Legal Capacity (e) Genuine Consent (f) Legality of Objects
and that ; no legal contract is possible or apparent without an offer.
and that; If this is the supported rule of international contract, then it speaks for itself, the PCT must also have an offer with a supplier before it can sell anything to an end buyer. To try and secure funds first without having an offer , could cause the PCT to face charges of fraud or misleading conduct.
IRREVOCABLE PAYMENT GUARANTEE
Created by FTNX as an in-house instrument that a PCT can readily use. Used as a promissory note to pay for commission payments, rebates. P.G. LDD, and compensation as needed, as drawn up the PCT heading a deal. If the term ‘This IPG adheres to ICC UCP 600, 2007 Edition “ then the rule of issuance must also follow such rules.
if the shipping company offer in a CIF transaction offers insurance at let's say 60/100 rate it means that the value of goods is attracting an insurance cover premium of 60 cents per every 100 dollar value of goods. i.e NBC Goods valued at $6,000,000.00 attract an insurance premium for class A insurance coverage at $ 36,000 dollars. If a carrier, for instance, has to enter a port located at or near a war zone up to 8 per cent of the value of the goods could be processed to cover the risk for the vessel entering a war zone. Be sure that the supplier provides the correct coverage at Class A unless the end buyer rejected Class A coverage to favour a Class ‘C’ coverage instead. The Insurance business is tricky business . Items being covered applied on most policies have to be read intently. Example: “ All damage caused by a burst pipe are covered“ But ! Is damage to the pipe itself covered? Insurance policies readily state what will be covered , but equally , a simple entry stating that “the replacement of the pipe is not covered ‘ is an easy aspect to apply and yet, such clear advice is often omitted from the policy. Read the policy intently before taking out insurance cover- even in matters to do with trade and don’t reply upon the advice of the broker selling such policies, who are eager to take your premium, and are just as eager to explain to you when a claim is made - what’s not covered, at such a time, and not before.
INSTANTANEOUS CONTRACT APPLICATIONS (ICA)
ANOTHER IMPORTANT IN HOUSE ASPECT DEVELOPED BY FTNX
Regardless of what other countries or legal systems apply in such matters, the PCT shall adhere to the following advice about ICS. We deal in ICS business application via the internet and email system, in where the world has become ‘very lazy’ in applying hardcopy contract to favour online application forms which in many cases are legally flawed and illegal aspects, not evident until someone challenges them. Don’t get caught on a technicality. All contract are posted in hardcopy formats and all online documents applied via the email system have the following added header terms applied when the word ‘original document’ is placed on a document header.”This PDF document is deemed an original document after transmission has occurred, as applied on the side of the sender, evidenced by the addition of ‘Meta Tags’ to the document, to facilitate the electronic transmission of the document by e-mail. The addition of a Meta Tag or Tags confirms the standing of the document, as being an ‘original document.’
The PCT heading a deal is responsible for collecting, protecting and payout commission payments to each member who assisted the PCT on the closing for a deal in a manner as prescribed under TRIBE, or better but not less. The PCT has the discretion to bypass TRIBE if a more favourable or equitable aspect is apparent. If a ‘’fully transparent’’ incentive is offered to a supplier or end buyer so as to secure a deal, a ‘rebate’ is paid. The PCT secures the largest amount as the PCT bears all legal liabilities of the deal. The PCT share pays for the Humano Humanitarian ( as stated in TRIBE) rate on behalf of the closing string. The P.A get the next highest rate, considerably higher than any ISS string member share. The remaining ISS string member takes an even share of the remaining rate. At the discretion of the PCT, the rate paid out can only be 50 or even 60% of the anticipated gross profit earnings.Any unseen expenses are paid from this gross profit earning, leaving the PCT with a net profit . If 5.00 per MT is the anticipated gross profit , then the PCT is entitled to keep at least 50% but not more than 60% for bearing such obligations and responsibilities. 50% of the funds that remain, 25% is shared among the sell side and buy side PCT’s assisting the principal to close the successful deal.
Buyer beware – is a legal maxim and is an aspect of business that also effects the PCT when acting as buyer. This is why the PCT must only secure export ready goods from a supplier in possession of such first. This is the only safe way to secure goods being offered to the end buyer, by the PCT. A PCT cannot consider to trade on goods offered by an ill informed trader. The risks in doing so cannot be mitigated.
BACK TO BACK TRANSACTION
Back to back transactions cannot be conduct by an informed trader or PCT. Trader ‘B’ buys from ‘A’ coal at 100.00 per MT. Trader ‘B’ sells it to ‘C’ for US$ 110.00 per MT, who in-turn, sells it to ‘D’ for US$120 per MT etc.etc. Looks good on paper, alas its a highly risky transaction ad not supported by a UCP endorsed DLC, and the BOL has to remains open ended until the final end buyer takes possession .Unlike most think, the actual BOL is not a transferable instrument, but an assignable instrument ; which further means that the whole ‘ assignment ‘ of the BOL must apply.
SEND NOW PAY LATER
SO YOU’VE (PCT) ARRANGED A DEFERRED PAYMENT DLC / APPLICATION?
A shipment of 140,000 MT of marine diesel is shipped to a far away destination port. A lien is placed on the fuel until payment instrument used, is collected upon. A few weeks later the seller has gone bankrupt and call in administrators, who demand payment from current creditors. The buyer of the diesel fuel refuse to pay. A court date is set and a hearing is conducted. The administrators want the fuel returned as enforced by it lien. The buyer argues that it cannot return the ‘very same fuel’ as it been used up ( all gone ).The end buyer will mostly likely win the case, as only the fuel ’ it had sold’ can be recovered. A lien is distinguished once the original product not longer exists. Changing the raw product to something else has the same effect. Buying PET which is later turned into plastic bottles automatically (in most cases) dissolves the effectiveness of any guarantees or liens attached. A country where sanctions apply to a supplier of crude oil ,has crude oil delivered to to a ‘friendly’ non sanctioned country.The non sanctioned country, via a refinery adds an ‘additive’ to the crude and blends it with another grade of crude oil , then offers it to the buyer who originally sought crude oil from a sanctioned country, which he subsequently later found he was unable to buy. The same buyer can now buy the ‘different’ crude oil on the condition the country where changes were made issues a certificate of origin. The funds go to the refinery in the sanctioned country to ensure conforming bank will enact on the DLC used to pay for such a ‘new product.’ The refiner then take its expense from the payment , and remits the sanctioned country, its sell price sought as agreed upon earlier