1. NCNDA + LOI + FCO
NCNDA (‘Non-Circumvention and Non-Disclosure Agreement’): This is the document which protects all parties’ general information and intermediaries / brokers financial interest (the commission fee) and will be required and signed by parties involved before LOI and following steps. It is very important to have this document embedded in a contract as an integral part rather than as an addendum to a contract.
LOI (‘Letter of Intent’): Buyer sends a LOI to Seller. This document should be on Buyer’s letterhead (Corporate official stationery with full address and contact information. The letterhead of the Company must correspond to the Bank Account Holder on the banking information provided), duly signed and sealed. It is important to express inside, the Buyer’s intention about what to purchase in terms of product, quantity, quality (specifications), shipping requirements and schedule. The LOI also requires further information of the Buyer, as full banking information (including Account Holder, bank address and officer’s contact information; SWIFT Code; account coordinates, etc.) and must include explicit authorization for ‘soft-probe’, in favor of the Seller.
Regarding Payment Method, most of our Clients used to prefer the L/C, but depending on type of commodity and other specific circumstances). Even though, more preferable are: Fully Funded Documentary L/C payable at sight (FFDLC); Revolving Documentary L/C (RDLC), Stand-By L/C (SBLC), Bank Guarantee (BG), Escrow Account (EA) or Wire Transfer after inspection (100% or x% deposit and y% balance after inspection) (T/T).
The L/C must be issued or confirmed by a prime International Bank acceptable by the Seller.
The LOI must be signed and stamped. The names and positions of the Company officers signing LOI must be clearly indicated. Otherwise, the document has no legal value.
FCO (‘Full Corporate Offer’): Once receiving the SCO signed by the Buyer, the Seller will indicate, then, if all conditions are satisfactory or it would be necessary to negotiate those points that are not accepted. FCO can now be issued by the Seller since he knows exactly all the terms and conditions of the transaction and has agreed to legally meet them all, including price. As a result of the LOI duly notified and additional negotiations to determine general and particular conditions, the Seller sign and notify the Buyer the FCO, which shall be done following same formal conditions than the LOI, and including whole business conditions to obtain formal acceptance of the Buyer in order to obligate Parties towards the SPA execution.
