Written by Sonia Quinones-Egipciaco CEO/President
This term is used out on the Internet by inexperienced traders as a “Letter of Intent” which is incorrect. LOI mean “Letter of Indemnity.” Inexperience “intermediary seller” who is claiming to be the supplier will ask for a “Letter of Intent” to purchase goods.
An intermediary cannot give a letter of intent to buy goods as your intentions are not to buy goods but to sell the “Title” of the goods. So your letter of intent to buy goods would be a lie.
Giving a Letter of Intent only means “Yes I intent to buy the goods but I can change my mind anytime. A letter of Intent is not a binding contract. The Letter of Intent is a total waste of time on a worthless piece of paper. An intermediary can only give to the supplier an “Offer” which is to SELL the Title of the supplier’s goods.
This term means Irrevocable Corporate Purchase Offer. This term will not work for the intermediary.
An ICPO may work for the end buyer to the supplier dealing with each other but not for an intermediary. An intermediary works with different applications. Once again, intermediaries cannot “irrevocably offer to purchase” the goods when not purchasing. They are offering to sell the “Title” to the said goods, not purchase and take possession of goods. If any intermediary offers you an ICPO you know they are inexperienced or trying to scam you. Only the end buyer can offer such a document.
The intermediary should first ask the supplier for a “RFQ” (Request for Quote) not issue a (LOI). The next document is an “Offer” for you as a “buyer/seller intermediary” to consider from the supplier (“Offer to Sell”) Not (ICPO). This is all that is needed (Quote, Offer). Not understanding the proper procedures and documents for an intermediary one of two things will happen.
1. The deal will collapse, and/or
2. You as an intermediary will be circumvented. LEARN, STUDY and UNDERSTAND.
Only sometimes these flawed terms and documents will work between an end buyer and a real supplier. Not very often but sometimes, as anything can be implied between end buyer and supplier. For the intermediary, these terms and documents will NEVER work. In the International Trading business, the only thing needed is a “Quote” “Offer” “Contract” “Payments” and “Delivery of goods”.
This post originally appeared here