A buyer is not only interested in product specifications but also, terms of trade to avoid running into hitches in the course of a business transaction. That is why soft/full corporate offer comes in. It helps in clarifying the terms and conditions a seller is willing to transact business from the outset. Also, a soft corporate offer (SCO) is generally used in import/export business and most especially commodity sales.
What Does Soft Corporate Offer Mean?
It is an offer from a seller stating product specifications as well as his terms and conditions of trade. It usually comes on issuing company’s letterhead but may not contain a specific recipient.
Also, it provides a prospective buyer with enough insight about a sellers modus operandi. A smart buyer may be able to spot red flags on an SCO and use the same to his advantage – discontinue transaction. At the same time, it gives room for negotiations as a buyer can demand amendment of terms and conditions.
Furthermore, Soft corporate offer shows the seller’s capability and readiness for a business transaction with an end buyer. It also states the details offered commodity either for export or local transaction.
Other essential content of a soft corporate offer includes product name, quantity, quality, payment method, price and many more.
Transaction procedures is another essential part of a soft corporate offer. It’s the step-by-step guide on how the transaction will flow from inception to the end. A seller may want payment before delivery, but a sceptical buyer may opt for settlement on delivery.
A Typical Example of Soft Corporate Offer
There is no particular format for writing SCO. What matters is the provision of sufficient and understandable information about the product and attached terms and conditions.
An SCO for crude oil may come in the form of the one we have below:
SOFT CORPORATE OFFER
Sequel to the receipt of your mail dated 4/12/2017, we respond thus;
We, Rosabel Resources Limited, as Seller with full corporate and legal responsibility with our JVC partners, make this offer indicating our willingness, readiness and ability to supply Bonny Light Crude Oil OFF OPEC, SPOT/LONG CONTRACT monthly basis for 12 calendar months. The supply shall start with a trial shipment of 2Million Barrels (2m bbl), and followed by Four million barrels per months within the next one year plus extension & rollover. The supply shall be from our export bulk allocation permit License, on equity/concession per the terms and condition as hereunder set forth.
TERMS AND CONDITION
PORT OF LOADING: BONNY TERMINAL BONNY/AKWA TERMINAL VIA PORT HARCOURT SUPPLIERS:
NNPC JV OPERATORS, BONNY TERMINAL
CONSIGNEE: To be advised (TBA)
VESSEL: To be nominated (TBN)
PAYMENT OF PRODUCT: Shall be by confirmed SBLC VIA MT760.
INSPECTORS: S.G.S or it’s equivalent
BONNY TERMINAL/AKWA TERMINAL VIA PORT HARCOURT
Delivery: CIF Basis
POD: China or ant safe port in the world
Gross Discount: $7/5, Inclusive of buyer’s side commission
Price: As published in plats crude oil market wire for The three (3) day’s consecutive publication used after discharge.
Currency: United States Dollar. USD$
SPECIFICATION BONNY LIGHT CRUDE OIL
Specific Gravity: 0.8459.
Water Content: 0.2% Vol. Max
BSW: 0.6% Vol., max.
Pour point: Below 40 Degree F. max
Salt: LB per 1,000 bbl, 12, max
Total Sulphur, wt%: 0.14 max
Reid Vapor Pressure: 6.52 PSIG, max
Carbon Residue, wt%: 1.0, max.
VINI, PPM wt:, 2.0
Vis, cst @ 37.8 Deg C.: 3.47, min.
Yield C1-C4 wt%: 2.10
PROCEDURE FOR THIS TRANSACTION WITH 2%PB UPFRONT
1. Buyer & Seller sign and seal the Sales & Purchase Agreement (SPA). An electronically signed copy of the SPA is legally binding and lawfully enforceable. Both parties lodge the fully executed SPA with their respective banks. Furthermore, the buyer sends Seller full details of the Receiving Port of Discharge (POD) to include full information of harbour master, shipping agency, Inspection Company etc.
Buyer/Buying Companies must issue their detailed current/updated Client Information Sheet (CIS)/ KYC, including passport/license data page of Buyer.
2. Buyer’s paying bank (Top 50 World Prime Bank) shall issue R.W.A via swift MT199/MT799 transmission (see Annex .A.) to Seller fiduciary bank(Top 50 World Prime Bank, Bank of America, Sandy Springs, GA, USA) account or any Top Bank in US/EUROPE, stating Buyer/Issuer readiness to swift SBLC (including value, duration and acceptable verbiage) via MT760 transmission within 72 banking hours upon receipt of 2% Performance Bond in the value of $2,000,000.00 (Two Million Dollars) via MT760 transmission from Seller’s nominated Bank. Buyer/Issuer Bank provides carbon copy of SWIFT to Seller for immediate confirmation and authentication
3. Seller’s fiduciary bank confirms and authenticates R.W.A and within days SWIFT the 2% Performance Bond (Performance Bond Guarantee, as per Buyer/Issuer accepted verbiage) in the value of $2,000,000.00 (Two Million Dollars) via MT760 transmission to Buyer/Issuer Bank account.
4. Immediately within 72 banking hours upon receipt and confirmation of the validation of the 2% PB SWIFT, Buyer’s financing bank shall issue S.B.L.C via MT760 swift transmission in the value of $100,000,000.00 (One Hundred Million Dollars) to Seller fiduciary bank as per accepted verbiage and duration (see annexe A). Buyer’s Bank provides carbon copy of SWIFT to Seller for immediate confirmation and authentication.
5. Within Fifteen-Twenty (15-20) banking days, Seller’s nominated vessel shall load, and Seller Secures Full Cargo Documents and Title in both Seller’s and Buyer’s name. Seller furnishes Buyer with copies of the CPA, Q88 and issues full shipping cargo documentation from NNPC to Buyer.
6. Vessel sails to Buyer’s POD. Furthermore, buyer’s POD will receive ETA updates ten (10) and five (5) days and then at forty-eight (48), twenty-four (24), and twelve (12) hours before arrival at POD. Upon arrival at Buyer’s POD, vessel announces the arrival to Port Authority/Navy, and buyer’s shipping agency clears vessel into the POD Anchorage.
Note: The loaded vessel will only anchor in the international waters of the POD country pending Clearance from buyer agent. Additionally, expenses; port charges, levies, security, tugging etc. that might arise as a result of a vessel coming into the POD country harbour/port/terminal/storage or waters will be borne by the Buyer. All clearing processes will be carried out by the Buyer’s Shipping Agent. If after seventy-two (72) hours upon vessel arrival and there is congestion at the port which thus causes delay, Buyer shall bear the cost of demurrage.