10 ITEMS AN 'ICPO' MUST HAVE

Most ICPOs you see these days are improperly put together by uninformed agents and end-buyers. We have found out that many ICPOs are not enforceable; some in most cases get trashed by seasoned Sellers who can’t afford to have their time wasted. So in order to do business with us, a Buyer MUST BE prepared, WILLING & ABLE to supply us an ICPO with certain required information in it.

 

Note also that we hold our clients’ information with utmost high regards and sensitivity, and as such we don’t float our clients’ docs around anyhow; specific docs ONLY go to specific clients depending on the match up we have between our buyers and sellers. And on any given transaction, a seller and the next closest seller to a buyer’s deal in terms are the ones that only get to see any document.

 

This list below comes from my blog page on commissions; here are the 10 Items an ICPO should have:

 

1. Product Name

 

2. Product Specifications

 

3. Price per units (e.g. per metric tonne)

 

4. Quantity in units (e.g. metric tonnes)

 

5. Port of Destination (broker should confirm that the port discharge rate is realistic)

 

6. Heading reads: IRREVOCABLE CORPORATE PURCHASE ORDER

 

7. Signed by someone in the company with authority to sign and ICPO should be notarized (publicly witnessed)

 

8. Bank information (with authorization for soft probe)

 

9. ICPO offer should have a commencement Date

 

10. Date of expiration of the offer (document might be invalid, without one)

 

 The commission in this industry are huge, but only if you get paid

 The ICPO must be a legal, enforceable document, because if you have a problem and sue, you can't win

 These ten items make the 'contract to buy' a legal document

 Few brokers are capable of determining if the ICPO is a legal document

 An incompetent broker doesn't really know when he has something valuable

 Being able to create a legally enforceable document makes the broker's efforts valuable

 The banking information should be first confirmed, by the broker and subsequently, by the seller

 Very few brokers confirm that the buyer can pay for the product or get an L/C; They don't know how to do it

 Most of the time, when we reach the finish line, we can't cross, because the buyer can't pay!

 Deals which don't close have no commission for anyone,

 It pays to learn brokering skills and do it right

 A skilled broker arrives at the bargaining table with good information

 A skilled broker is more valuable than an incompetent broker

 A skilled broker is a very welcome participant to any deal.

 

20 PRELIMINARY QUESTIONS TO ASK A BUYER

These questions will help you win favor with buyers and suppliers. Brokers, who do a superb job, make a lot of money and retire. Those who are not very professional remain behind. The average broker who is left behind is not very good at his job. So this list will help any broker improve his professional skills. Then each can get rich, leave the industry and live happily ever after. Of course, that means he or she leaves behind a bunch of stumbling, bumbling 'clowns' who haven't got a clue. If you want to work for every fake buyer who comes along, don't ask any questions. Waste your time and lose your chance to work for those who are real buyers.

For me, the decision to work for a buyer depends upon the following:

1. Does the alleged buyer really need the product?
2. Is the quantity sufficient to put out the effort to find what the buyer wants?
3. Does the buyer have a maximum shipment quantity (for each delivery) in mind?
4. Has the buyer shopped around for suppliers?
5. Does he know market prices?
6. Does the buyer have quotes from any other competitors?
7. Has the buyer offered any price?
8. If the buyer has a price, where did it come from?
9. Is the price realistic?
10. What is the best price of a real, alternative supplier?
11. Has the buyer bought this product, before?
12. Does he have a business license in the country he wants to do business?
13. If you ask the buyer the amount of the total purchase, will he stumble or does he know what he's spending?
14. Can the buyer pay for it?
15. When does he plan to pay, at sight of goods, as they leave the port, after SGS inspection, bill of lading?
16. What is his payment instrument?
17. Are his other terms acceptable?
18. Which port does he want the goods delivered to?
19. What is the discharge rate of that port?
20. Is there a match between port discharge rate and buyer's quantity request?

I consider these, preliminary questions of the well-trained, professional broker. A broker invests his time and he has to be selective and bet on winners, not losers. Some buyers are real, but most are not and so you have to ask questions. In asking questions, you get a clearer idea of who your buyer is and how real his order is. If you have a friendly discussion with the buyer, you will learn what he wants to do and what he is capable of doing. You will discover if he has unrealistic expectations or if he has experience, knows the market and really wants to buy product. So, please develop a list of your own questions and collect the responses.

When you make a presentation, give some facts to show that you are a skilled broker and a professional. When you prove your value, it's much easier for others to justify paying you. If you make up a presentation checklist and use it as a format, you gain the respect of the suppliers and they are less likely to betray you. If you and your buyer agree on a price, then ask your buyer to sign an NCNDA, before a notary public and give you an ICPO with six issues covered, adequately. If your buyers comply with these requests, you can consider them very serious about buying product.

I will respect your professional style and take your buyer very seriously and respond with the same seriousness, to get the job done, so we can all get paid. We will all make much more money, if we operate in the most professional manner.

Buyers recognize our skill and so do our suppliers.

Hope this helps :-)

60 QUESTIONS TO ASK A SELLER

1. Which product is in question?
2. What are the product specifications?
3. Is there anything unusual about the product, such as being recycled or irregular in some way?

With bitumen, one seller did not tell me that the product is recycled...

On D2, a seller in Venezuela forgot to tell me that the sulfur content was extremly high;

1. Does the product conform to any widely acceptable world standards?
2. What is the current price of the product?
3. Has that price been verified, recently?
4. Is the price quoted a CIF price or is it FOB or other?
5. What is the entire process?
6. What are the complete details of how the product is packaged?
7. Is there any requirement for application or license with any entity?
8. Is there an up front fee?
9. Does the seller have a quantity minimum?
10. Is there a seller-mandated quantity maximum?
11. How many brokers between you and the seller?
12. Is there a commission?
13. How much is the commission?
14. Who takes part of the commission?
15. Who is considered the buyer's side of the transaction?
16. Who is considered the seller's side?
17. Who are the intermediaries?
18. How is the commission divided?
19. What is the claim of commission, for each person in the chain?
20. What will each broker in the chain be doing, in order to earn his/her share?
21. Will the brokers be forging any seller signatures?
22. From which port will the product depart?
23. Does the seller interfere with what is charged for the product?
24. Does the wholesale price vary, as a function of what is charged?
25. Will the seller sign an NCNDA?
26. Will the seller have his signature notarized on the NCNDA?
27. What is the policy of the seller, when buyers attempt to circumvent brokers?
28. Which method of payment is acceptable to the seller?
29. Is the seller flexible on payment method?
30. Is there a higher price if the payment method is varied?
31. Have you shipped with them?
32. Has anyone ever shipped with them?
33. Which insurer has issued performance bonds for this seller?
34. Can we speak with the insurance company?
35. When can the seller begin shipping?
36. How long has the seller been in business?
37. Does the seller require that the buyer use a reliable bank or world top 50 bank?
38. Does the seller use a reliable bank?
39. Who is the Paymaster?
40. How do brokers get paid?
41. Are the brokers paid directly by the Paymaster or paid by the seller?
42. Have you ever been paid by the seller on any transaction?
43. Are the procedures flexible or rigid?
44. How long does it take to get a Soft Offer?
45. How long does it take to get an FCO?
46. How long does it take to get a Draft Contract from the seller?
47. How long does it take to get a Final Contract, with full cooperation from the buyer?
48. Who is the Paymaster?
49. Can we trust them to pay us?
50. Will the seller ever have possession of our commission?
51. Is the Paymaster the seller's bank?
52. Is there a contract with the Paymaster that we can read now?
53. Do you have this Paymaster contract in your possession?
54. Will the Paymaster send each broker a notarized copy of the IMFPA?
55. When will we receive a notarized copy of the IMFPA?
56. Has the Paymaster ever been sued in a dispute over commission?
57. If so, what were the results of that case?

If you are short on questions to ask, here are 50 to get you started, there are many more questions you could ask:

• Questions about Price
• Questions about Procedure
• Questions about Payment Terms
• Questions about Broker Commission
• Questions about Shipping
• Questions about Available Stock
• Questions about Packaging
• Questions about Seller's History
• Questions about Documents
• Questions about Insurance
• Questions about which Banks are accpetable, to handle the transfer of money
• Questions about the Paymaster, which might be the most important questions of all, for a broker

I have not exhausted the list here and these eleven categories are not the full story.
I think I've merely scratched the surface on the total list of questions, which could be asked about any commodity.
It takes time to get to know your seller and the questions never end.
After you have done 100 transactions with your seller, you will know the answers to many of these questions
If you don't ask questions, you will be taken advantage of, by 'hit and run operators' who take what you have and try to give you nothing for it.
If you're allowed one question for each dollar of commission, you might as well ask enough questions to have a clear understanding of the deal, so you don't get 'experienced' again!

Hope this helps :-)

Cover Letter - The Professional Broker

Real buyers want ......real sellers and ........real products. Our job is to find them and we need to get paid, if we are to continue helping buyers find what they want Documentation and information is the key.

Every purchase starts with the money and without it, you don't have an order, you just have product. We must know with certainty that we have the money to make the purchase. If a buyer wants us to work for him, we have to have reason to believe that he is a real buyer. So, I put together 20 questions to ask the buyer (ref. January, 2010 Blogpost herein). If the buyer can pay and has a reasonable price, then I'm willing to work for him.

Proving that I have a real seller is also part of the process, but sellers want orders from competent brokers who have documents and information. Real sellers are busy with real orders from real buyers and we can't pester sellers with requests for prices on all their products, every day, without an order. They won't give me price quotes, allocations, FCOs, commitments or even a soft offer, without a commitment from the buyer.

We can discuss price with the buyer, initially, but if the buyer hasn't shopped around, isn't familiar with market prices or has unreasonable price expectations, then the seller will regard the request as frivolous. A skilled broker asks the appropriate questions and assembles the necessary paperwork to make a professional presentation to the seller.

When brokers bring a deal to a seller, they must have something valuable to offer and information and documents are what is called for. Brokers want a real seller and we will prove that the seller has product, in the process, but the buyer's capability comes first. A buyer who is not proven capable of paying or who has not made a commitment to buy with an ICPO is not a real buyer.

If brokers arrive at the bargaining table without documents, they make of all us look unprofessional, unskilled and quite useless. Most brokers lack skills in negotiating, have no idea which documents are needed and therefore, have no means of obtaining such documents. A broker has to know which documents will be needed. A broker has to be capable of convincing buyers and other intermediaries to bring those documents forward, properly executed. Brokers have many reasons for not being able to obtain the proper set of documents. Most of the brokers I have met haven't even obtained an NCNDA, signed by the buyer. Some will go so far as to forge the buyer's name to this very important document. Forging the buyer's signature puts all brokers at risk of losing our commission. We need a real signature on the NCNDA!

All signatures must be real and all documents must be carefully reviewed by all brokers in the chain. The most competent brokers will find the mistakes and advise the others. Please try to be the most competent broker in our transaction. Make lists and use them for all future transactions. Avoid the timewasters by asking the right questions early and making a decision about who to work for and who to avoid.

When a buyer asks you to 'chase the stick', like a dog, don't go running, without asking some preliminary questions. I have prepared a list of preliminary questions and its been shared in this blogpost in January 2010. Add to this list and then the list will evolve into your own list. There is nothing wrong with asking the buyer a few questions, like:
'Have you bought this product before?'
'What did you pay, last time?'
'Can you still get product from that source?'
'What is the current price of this product?'

Buyers who have never bought before and have not shopped around will not have prices and those buyers are unlikely to make a purchase. If a buyer has a supplier aren't you curious why he doesn't buy from them again? You may ask:
'If you have a supplier, why are you seeking a new source?''
'Can you pay for this product?'
'Will you provide me with proof that you can pay?'
'Will you sign an NCNDA?'
'Do you sometimes have your signature notarized?'
'Is it any trouble for you to sign before a notary?'

From experience, buyers who do not cooperate are less likely to make a purchase, because cooperation is necessary and real buyers know it. Be decisive and don't waste time, once the odds of closing drop below your minimum chances. If the buyer is cooperative, it is more likely that he is a real buyer and can pay for the product. Intermediaries influence the chances of success too. Most of the time, you are not working directly with the buyer. There are brokers insulating you from the buyer and I have found that most of these intermediaries are incompetent. When you begin to ask them questions about the buyer, you find that they don't know much, they don't have facts or documents. They have a lot of excuses for noncompliance and they have many stories to tell you about fakes in the business. A lack of documents reveals a broker's incompetence or it reveals a buyer's lack of cooperation; the broker who stays with an uncooperative buyer is also incompetent. We can't close deals with incompetent brokers, who have no documents and possess few organization and negotiating skills.

Intermediaries must be capable of ascertaining information from buyers and obtaining the appropriate documents. Choose your cohorts, carefully; some are already skilled and some are worth teaching, but others are hopeless and will waste your time. Know what the seller needs to give us a commitment and make sure you arrive at the bargaining table with something useful to all.

Collect all necessary information from your buyer, return it to me in a proper template, so we can put it on the soft offer. I'll send it to you at your request, and you can send it out to your buyer. All brokers must sign an NCNDA, prior to exchanging documents which contains contact information of buyer or seller. I'll send you my promise not to go around you at your request, to open the door to a long term business relationship.

If you do not have a blank NCNDA, you may also get one from me so you can sign and return asap. Send this blank NCNDA to other brokers to sign as well. You and the other brokers will not need to have your signature notarized. You may also need to send a blank NCNDA to your buyer, as well. The buyer should sign, with a witness present, so he doesn't later claim that the signature is not his. A broker can't afford to put buyer and seller together, without a promise from both that they won't circumvent us. If we have a dispute, do you want to give the ICC exclusive rights to arbitrate?

You should know that the ICC doesn't arbitrate for non members and most brokers aren't aware of this. Notice that my NCNDA for does not give the ICC exclusive rights to arbitrate our disputes. If you call the ICC, they will tell you that they want an upfront fee, just to consider arbitrating a dispute for you, if you are a member. The ICC told us that they wanted a total of $88,000 and you will know more, if you call them too. When I tell brokers about our experience, they are surprised to hear that there is an upfront fee and that the ICC does not arbitrate for non members. We must have knowledge about all aspects of this business, if we are to succeed.

Sharing information helps a great deal and this blogspot has a collection of useful facts, opinions, ideas and experiences. It should be read by everyone and the lessons passed on to all that you meet. We are all teachers and if you train those around you, they can do a better job of closing your deals. Assembling the documents is necessary, if sellers are going to take our request seriously. If you can't persuade the buyer to cooperate, then you don't have a buyer. If the other brokers can't get the buyer to cooperate, then you don't have brokers. Unskilled cohorts often have their hands out and are expecting to be paid millions of dollars for their incompetence.

Surround yourself with those who have the highest skills, because this increases your chances of success. Every deal begins with money; Money to pay for products!

If you don't establish that you have the money to pay, the request is just a request, it's not an order.

The first question a broker should ask is not, 'Do we have product?', but 'Do we have a buyer?'

The skilled broker knows which questions to ask and knows what to do when the answers are given. Real buyers know that they must put out a real commitment, in order to get the skilled and professional broker to work for them. When you get a large order from an unskilled broker who has no documents, you should realize that this is a very unlikely event.
Do you invest your time or quit early?
If you invest your time, what will be required in order to make this unlikely event a likely event?
Will you have to train brokers?
How fast will they learn?
Will you have to persuade brokers to persuade brokers to persuade brokers to persuade the buyer to cooperate?

This might be a waste of time if there is a weak link in the chain. Unskilled brokers are incompetent; some are capable of learning and others are not going to learn fast enough to make the deal happen for you. You don't have time to waste and neither does the buyer. A real buyer is a very smart person with a lot of money and a lot of experience. Real buyers don't engage unskilled brokers, because they know the results from experience. A real buyer is very selective about who gets the order and who is trusted with bank information. It would be prudent to be the most capable broker you can be and demonstrate your skills early, by asking the right questions. You must convey to the seller that you have competence, because this implies that you have product and that's what a real buyer wants. The skillful broker goes from verbal discussion to written contract, in a short time.

We discuss price, first, and once we agree on a reasonable price for both sides, buyer and seller, we discuss other terms of the order. We must know where the shipment is going, how it will be packaged, who will do the inspections for quality and quantity and the process for paying for it.

It is extremely important to advise the buyer that we have no up front fees of any kind and that will be in the contract. After the verbal discussion, it's time to go to contracts. The NCNDA is the first test of the buyer's belief in you and the others on your team. If you asked the right questions and conducted a probe of depth to ascertain exactly what the buyer wants to do, you will find that your probe does not offend the buyer. On the contrary, you will convey professionalism, careful attention to detail and the result is buyer will have confidence in you and you'll get the buyer's cooperation and respect.

Buyers spend billions of dollars on commodities, such as the one you are offering here. Buyers quickly recognize a skilled broker, who asks the right questions and does not simply 'chase the [imaginary] stick', like a dog. Brokers who hear of a large order and go running off, without any facts, demanding proof of product, before they know much about the buyer are regarded as fools. Buyers will not trust a careless, thoughtless broker with a valid ICPO, because it has confidential information on it. When a broker brings you an order request and has no information, no documents and no skills, save time and reject the timewaster, because it can't close, without facts and documents. My seller will not take your buyer seriously, even if the buyer is real, because the brokers haven't a clue about how to organize and consummate that transaction.

Look at the files that are herein and consider each a valuable collection of ideas. Try to understand how each file can help you organize useful information, process an order from a real buyer and earn for you a seat at the 'bargaining table'. Your chances of getting paid depend upon your skill level.

It's not how long you have been in the business that counts, but rather, how fast you learn what is necessary to close a deal.

Hope this helps :-)

NCNDA - NONCIRCUMVENTION, NONDISCLOSURE & WORKING AGREEMENT

Whereas the undersigned Parties wish to enter into this Agreement to define certain parameters of their future legal obligations, and considering their mutual promise herein and other good and valuable considerations, the receipt of which is acknowledged hereby, the Parties here to mutually and voluntarily agree as follows:
1. The Parties hereto and/or their affiliates of what_so_ever nature shall not, in any manner solicit and/or accept any business from sources that have been made available by and through the parties hereto, nor in any manner shall access, contact, solicit and/or conduct any transaction with such said sources, without the expressed and specific permission of the party who made such said sources available.
2. The Parties shall maintain complete confidentiality regarding each other's business and/or their affiliates and shall only disclose knowledge pertaining to these specifically named Parties as permitted by the concerned Party, unless agreed and granted and expressed written permission of and by the Party whom made the source available. This means that brokers may not reveal any source to any buyer or other broker without liability. No buyer, who gains privy to a source may reveal that source to any broker or buyer who is not a party to any transaction, without similar liability.
3. The Parties shall not in any way whatsoever circumvent each other and/or attempt such circumvention of each other and/or any of the parties involved in any of the transactions the parties wish to enter and to the best of their abilities shall ensure that the original transaction codes, date and proprietary information established are not altered.
4. The Parties shall not disclose any contact revealed by either Party to any third Parties as they fully recognized such information and contact(s) of the respective Party, and shall not enter into direct and/or indirect offers, negotiations and/or transactions with such contacts revealed by the other party who made the contact(s) available.
5. In the event of circumvention by any of the undersigned Parties, whether direct and/or indirect, the circumvented Party shall be entitled to a legal monetary compensation equal to three times the maximum service it should realize from such a transaction, plus any and all expenses, including any and all legal fees incurred in the recovery of such compensation.
6. In the event of circumvention by either Party, directly or indirectly, the circumvented Party shall be entitled to a legal monetary penalty equal to three (3) times the value of the transaction or the benefits derived thereof, whichever is higher, without any protest or litigation plus any and all expenses, including but not limited to all legal costs and expenses incurred to recover the lost revenue. The ICC does not arbitrate for non members and a charge of $88,000 in advance, just to consider the case is unacceptable to us, so we don't use the ICC for arbitration. A private attorney will be sought, if we have a problem to resolve.
7. This Agreement is valid for five (5) years from the date of signature, for any and all transactions between the parties therein, with renewal to be agreed upon between the signatories.
8. This agreement is valid for any an all transactions between the Parties herein and shall be governed by the English Law and in English language. It is further agreed that any controversy, claims, and or dispute arising out of and/or relating to any part of the whole of this agreement or breach thereof and which is not settled between the signatories themselves, shall be settled in a court of law of the United States of America.
9. This Agreement shall be binding upon the Parties hereto, and in the case of individual Parties, their respective heirs, administrators and executors and in the case of all corporate Parties, their successors and assigns.
a) The non_circumvention damages, the total commissions, fees or profits which would have been due and;
b) All loss sustained by the non_defaulting party by reason of such breach, and;
c) All expenses incurred in enforcing any legal remedy rights based upon or arising out of this Agreement.
10. Signature to this Agreement shall be deemed to be an executed Agreement enforceable and admissible for all purposes as may be necessary under the terms of this Agreement.
11. All signatories herein acknowledge that they have read and each Party fully understands the terms and conditions contained in this Agreement and by their initials and signature hereby unconditionally agree to its terms as of the date noted herein.
12. All signatories herein further acknowledge that by their initials and signatures, that they have full and complete authority to execute the document for and in the name of the party, for which they have given their signature.
13. The purpose of this instrument is to establish an internationally recognized Non_Circumvention, Non_Disclosure Agreement between the participating Parties. This Agreement may be signed in one or more counterparts and the parties agree that facsimile copies of this Agreement to be considered as a legal original and signatures thereon shall be legal and binding.
14. Signatures on the NCNDA must match signatures on all other documents in particular, the IMFPA and Letter of Credit.
15. This document is for the purpose of protecting Brokers and so, Buyers and Sellers must sign before a notary public, in order to avoid claims that their signature is a forgery.

This contract shall remain in force, for the duration of the term herein, provided that supplier and representatives of supplier act in good faith to keep promises, meet delivery deadlines, provide updates in a timely fashion and provide true information to buyer and buyer_representatives. Failure to do so, releases buyer representatives from this agreement, while it continues to bind seller and seller's representatives from circumvention.

This agreement is accepted without change and attested to this 17th day of June 2009:

PARTICIPANTS TO THE AGREEMENT
First Party_Buyer's Broker #1
Name:
Title:
Nationality:
Passport Number/ID:
Company Name:
Address:
State/Province:
Country:
Telephone:
Mobile:
Fax:
E_mail:
Web:
Date:
Seal and Signature:

Second Party_Seller's Broker #1
Name:
Title:
Nationality:
Passport Number/ID:
Company Name:
Address:
State/Province:
Country:
Telephone:
Mobile:
Fax:
E_mail:
Web:
Date:
Seal and Signature:

Seven Contracts

1. NCNDA
2. Preliminary Soft Offer
3. ICPO
4. Allocation & Soft Offer
5. FCO
6. Draft contract
7. Final contract

Since there is a sequence to these 7 contracts, some brokers might think it’s a procedure

These are not the steps to the seller’s procedure,

It is a list for brokers to use to explain how we process the order and contract it

It is a summary of the documents that the buyer must sign in order to get product from my supplier

They are a large company and have been around a long time

They have made changes over the years in their procedures and we have to follow them

This list is not their procedures

It’s our list

Brokers want to avoid circumvention and so we develop a list  

Buyers develop a checklist too and they use it when they scrutinize sellers and brokers and that helps them work effectively and efficiently

Everyone wants to get the job done, correctly and swiftly and that’s why we develop a list

The contracts listed have two purposes

For a broker, the first concern is commission

Buyers like to circumvent brokers and sellers often invite them to do so

My supplier doesn’t do that

When buyers go around me, my supplier tells me about it

My supplier has ten mandates

I deal with one of them and there are at least ten seller’s brokers, like me

I have at least ten buyer’s brokers, regularly looking for buyers and each broker has at least 10 prospective buyers

When you multiply it out, 10 x 10 x 10 x 10 = 10,000 buyers being interviewed by brokers for a possible sale

My supplier doesn’t want 10,000 prospective buyers calling his office, every day
He only has 100 people in his office
Those in the office don’t want to carry on the task of negotiating prices with buyers
They prepare the final contracts and don’t want to be involved in the lower level contract stages, because most go nowhere
Small sellers are more likely to invite buyers to come to them, directly
They know it’s circumvention, but they don’t care about playing fair
Circumvention ruins relationships
As a broker, I won’t tolerate it and you shouldn’t tolerate it, either
We should do our job in the most professional manner and we should get paid, if we succeed
A reasonable seller will agree and a large seller will insist upon it
Only if we are paid, will we repeat the process of finding buyers, negotiating price and writing contracts
There should be no contact, between buyer and seller
Contract are passed from broker to broker to the seller’s mandates
This list protects the broker’s commission, while doing all the legwork for the seller
Brokers who carry out the signing of these documents have value with sellers 
--------------------------------------------------------------------------------

Here is a list of those seven contracts which lead to sales to buyers

After we agree on price, buyer signs seven contracts
1. NCNDA

• All brokers sign, first
• Then we ask buyer to sign in front of a witness, like a public notary, so that the buyer doesn’t later tell us that he didn’t sign our NCNDA

2. Preliminary Soft Offer

• Buyer signs ………. from me
• No notary is needed, but a seal is nice

3. ICPO

• Buyer provides signed IRREVOCABLE CORPORATE PURCHASE ORDER and bank information

4. Allocation & Soft Offer

• Seller provides allocation and soft offer and buyer signs and returns

5. FCO

• Seller provides a Full Corporate Offer and buyer signs and returns it to his broker and then to the seller

6. Draft contract

• Prepared by seller and sent to buyer, who signs and returns with corrections

7. Final contract

• Prepared by seller, following the recommended modifications amended by buyer
• Buyer receives, signs and returns
• Buyer is then invited to visit the refinery, meet the important people and returns home with confidence that his order will be shipped

Broker's Kit

- Extract from Larry Wingo's Journal

 

Format

Many brokers are novices and that's OK.

 

What's not OK is the failure in communications, because deals fail as a result of a broker's inexperience.
I have devised a format for new brokers so they can tell me all the details about the order.
Fill it out once and use it each time there is a correspondence, between us.
It helps in communicating exactly which deal you are talking about and gives me all the facts on one page.
It saves me time and makes you look extremely professional in your field.
The form is not copyright protected.
You can use it anywhere, without fear.
It's my form.
I created it and I authorize you to use it, free of charge.
For the sake of clarity, use this format.

============================================

BROKER KIT
Here are the forms you need, to get started:

1. Cover Letter
2. NCNDA
3. IMFPA Buyer Signs 7 Contracts
4. 20 Questions for Buyers
5. Blank Soft Offer - JP54
6. 60 Questions for Sellers
7. Blank Soft Offer - Urea
8. Broker Duties Blank Soft Offer - Mazut
9. Collecting Information ICPO-10_items
10. The Process Blank Soft Offer - Cement
11. Official Seal Generator 20 Clues That It's A Scam!
12. Help with writing ads here Blank Soft Offer - Bitumen
13. Format
14. Payment Terms

--------------------------------------------------------------------------------

NCNDA - Commissions can be large and if you want to try to protect your commission, you will need a signed document from both buyer and seller, pledging that each will not go around you.

 

It doesn't mean that they won't go around you.

 

If your commission is high enough to give them an incentive, some will certainly try.

 

When you have a problem and call the ICC, you learn some new things about the ICC.

 

First, they don't arbitrate for you, even if you put them into your contract.

 

We called them and they said they don't arbitrate for non-members.

 

That might explain why they pass out their NCNDA forms for free.

 

They even make it easy for the buyer to go around you, with a penalty of one to one.

 

If they buyer or seller gets caught, he has to pay the commission, without penalty.

 

That's like a store putting up a sign which reads;

 

IF YOU GET CAUGHT SHOPLIFTING IN OUR STORE, YOU WILL HAVE TO PAY FOR THE MERCHANDISE THAT YOU STOLE - (No Penalty!)

 

This would certainly encourage every shopper to attempt to steal, rather than stand in long checkout lines.

 

In my opinion, that's what the ICC does.

 

They encourage stealing from us brokers.

 

Why would they do that?

 

Would it be to get more chamber of commerce members?

 

Maybe!

 

We also learned something else about the ICC.

 

They want money up front and then they assign someone to your case, within 30 days.

 

You don't even know if they will take the case yet!

 

Including dues, that figure came to $88,000 when we had a problem.

 

Brokers typically don't have $88,000 laying around to hand to the ICC for membership dues and up front fees and so we had to drop our case, but we learned from that lesson and we took the ICC out of our contract and we beefed up the penalty and we deleted all references to arbitration.

 

Why should we use arbitration when we can go to a private attorney and say, We have a commission of $50,000,000 and our NCNDA calls for triple damages, so it's $150,000,000.

 

Private attorneys would chase ambulances for part of a fee this large and we have the notarized signature of the buyer and his bank account too.

 

If the lawyer wants an up front fee, we contact other attorneys, until we find one who just wants 40% of $150,000,000 and thinks we have a good case.

 

You must use competitive forces to negotiate your best deal with attorneys.

 

The reason that they charge 40%, instead of 2%, is because few have the tchutzpaho negotiate with attorneys.

 

If you have two, competing, with both knowing about the other, they will cut each other's throat and a bidding war will ensue, because there is a $150,000,000 case and we have the documents to prove that the buyer and seller signed.

 

Maybe you can even get one of them to pay you an up front fee.

 

Hehe!

 

Then your sign can read; GO AHEAD, STEAL IN MY STORE AND SEE WHAT HAPPENS TO YOUR BUTT!

 

I'LL HAVE LAWYERS KILLING EACH OTHER TO GET THE CASE!

 

So, in conclusion, my NCNDA form has no mention of the ICC and no arbitration provision, for the reasons stated above.

 

If you agree, use my form and if you want to call the ICC and see what they tell you, to confirm or negate what I am reporting, you can do so.

 

You can call the American Arbitrator's Association too.

 

They have no membership dues, but they wanted an up front fee of $65,000 to handle our case, should we have a problem.
--------------------------------------------------------------------------------

 

IMFPA - If you are going to be paid, we will need your bank information so we can wire funds to your account.

 

I ask for this at the time of the NCNDA, because brokers, eager to run away with all the commission will put all their relatives on the payroll and some will even invent imaginary people who have to be paid.

 

When the IMFPA comes in, it has only one name on it.

 

One guy wants to receive the money for all others.

 

That's the giveaway that they are not telling the truth.

 

It happened to me, more than once.

 

Now, I want to see the separate names and bank accounts of those who are going to be paid, complete with SWIFT codes, so the Paymaster can pay each with a wire transfer to his or her own account.
--------------------------------------------------------------------------------

 

Payment Terms - Nothing wastes more time than buyers who can't pay and if you will just use this form to confirm that the buyer will pay according to these terms, we can discover, early, if we have a real buyer or just another broker who wants to 'buy cheap and sell dear'

 

--------------------------------------------------------------------------------

 

Format - Many brokers are novices and that's OK.

 

What's not OK is the failure in communications, because deals fail as a result of a broker's inexperience.

 

I have devised a format for new brokers so they can tell me all the details about the order.

 

Fill it out once and use it each time there is a correspondence, between us.

 

It helps in communicating exactly which deal you are talking about and gives me all the facts on one page.

 

It saves me time and makes you look extremely professional in your field.

 

The form is not copyright protected.

 

You can use it anywhere, without fear.

 

It's my form.

 

I created it and I authorize you to use it, free of charge.

 

For the sake of clarity, use this format.
--------------------------------------------------------------------------------

 

Signature - If you're going to be in the commodities business, you will have to be able to sign your name and send it over the internet, on a document, so you might as well learn how to do it now.

 

I can help you, if you have a digital camera and can sign your name.

 

Just take a photo of it and send me the bit map, JPG, GIF or PNG image.

 

You can scan it too and then you don't need me

 

--------------------------------------------------------------------------------
The Process - The baseball analogy helps many understand the complex process, by using similarities of the well known baseball game.

 

Just sit back and watch the explanation, in its easy-to-remember format of a baseball diamond.

 

First base is getting the NCNDA and IMFPA signed.

 

The the FCO or draft contract.

 

Next, the final contract and finally, the SGS inspection and funds are wired to your bank account.

 

It sounds simple, but most brokers can't get to first base.

 

Believe it or not
--------------------------------------------------------------------------------

Friday, January 15, 2010
Three main faults; Carelessness, Laziness and Greed
Today, I received a soft offer from a seller

 

We had negotiated a commission of $5/mt for the broker and me and the soft offer still shows $2/mt

 

My buyer has signed the NCNDA, given me an ICPO with bank information and I think he's a well qualified buyer who can afford to pay and wants to buy

 

So, what does my supplier do?

 

Does he give me some specific attention? No! He sends me the generic soft offer and he didn't even open it to see if it has all the details

 

The product specification is missing

 

This means that he expects my buyer to spend $42,000,000 per month for a year, more than $500,000,000 (five hundred million dollars) without product specs!

 

So, I write back and say, You are lazy and you are careless and the generic form isn't going to convince me to buy from you

 

The commission is wrong and there is no NCNDA from his source or their sources

 

I advised my counterpart to get organized, make a checklist and put on the checklist the things that we need, if we are to do business

 

Suppliers who treat you badly, before they get your buyer, will not treat you any better, after they get your buyer's ICPO, with his name, address, phone number, email and bank information

 

They don't need you, once they have your source and if you want them to respect you, you have to put it on the line, prior to handing over the ICPO

 

They structured the deal where the $8 of the $10 commission goes to them

 

This is pure greed and it's not wise, because the world is very competitive

 

My counterpart and I would have to share what's left, which is about $1/mt each

 

Almost all American boys have played basketball and therefore they have common experiences

 

I allude to the lessons learned on the basketball court

 

The boy who owns the basketball, is not often the best player

 

Neighborhood kids congregate to play a game

 

Two leaders begin to select kids from those who have assembled

 

Leaders choose the best players, first, naturally

 

At the end, there is one kid left over, typically the player with the least ability and in this case, he owns the ball

 

If he is not chosen to play on a team, he goes home and takes the basketball with him; GAME OVER!

 

Leaders don't consider ...... Who owns the ball?...... and What happens if he is not happy and leaves?.... when they chose their teams

 

They make the fatal mistake of not choosing the ball owner, so that they can, at least, have a ball in order to play the game

 

So, invariably, you have the same situation every time

 

The last guy to be chosen for a team does not play

 

He takes his ball and goes home

 

That ends the basketball game, before it has started!

 

Greedy brokers and those who like to be called, 'mandates' seldom consider that it is important to leave a little commission on the table for the guy who has the buyer, because if he takes his proverbial 'basketball and goes home, GAME OVER!

 

In our D2 deal, I pointed out that I have the buyer and my buyer has the money

 

I asked how much they make if I give my order to someone else

 

This is a thought provoking question and some can reason, but most people are not smart enough to figure it out

 

If I propose a 50/50 split, without giving them some new choices, greed allows them to think about only these two scenarios:

 

1. $8 to them and $2 to us; their proposal

 

2. $5 to them and $5 to us; my counter proposal

 

The psychology is not right and you can't expect anyone to select #2 when #1 is so much better, for them

 

Boys on the basketball court are not very thoughtful

 

They are impassioned by the game and they think only of winning

 

If the worst player were to remind them, as they are choosing players for a team, that the basketball is his and if he goes home, the game is over, before it has begun, they might be more thoughtful and considerate and allow him to play

 

So, I had to give them these options:

 

1. They get nothing (because I take my basketball (buyer) and go home and that ends the basketball game (D2 order))

 

2. They get $2 and we keep $8 (which is the deal they offered us and I want them to see how it feels)

 

3. We each get $5/mt (which is a fair deal and they should recognize that it's fair and at least they get something)

 

After I have delivered the stinging notion of giving my order to one of 64 D2 suppliers I have, at present, I proposed that we keep $8 and they get $2 to share among themselves

 

Once that torturing thought has settled in, I make a third proposal ....................'or we can just take $5 and all of them can share the other $5'

 

You can see how sophisticated the negotiation process can be

 

Greed is not very smart and if you are going to break them of the 'greed habit', you have to use psychology and draw from your basketball days or any other experience you have had

 

They wisely agreed and we had, at that point, a verbal acceptance of $5/mt for the two of us

 

Then the soft offer arrives and we're back to the $2/mt commission and it appears that they think they are going to cheat us by reneging on their agreement

 

They won't get my buyer; I'll take my basketball and go home!

 

This is the lesson of greed, now let's move to the next vice, carelessness

The buyer wants unleaded gasoline as well as D2 and he has given me specs for both

 

It is my job, as broker, to make sure he has what he requested, or he will take his 'basketball' and go home!

 

The guy with the money is the boss and he holds all the power in this game

 

If you forget it, you pay dearly

 

The soft offer is lacking the product specification, required by my buyer

 

It has the designation for D2, which is GOST 305-82, but it's lacking the ASTM 2699 for unleaded gasoline

 

The buyer is American and so he gives us the American spec, ASTM 2699

 

Perhaps the Russian Federation equivalent is acceptable, GOST 8226

 

Without any spec, the prices are meaningless

 

It's like ordering a pizza and you get a price, without the size

 

How do you know what you are getting?

 

Buyers don't spend $500 million on D2 without specs and you had better pay attention to the details!

 

Failing to give this very important issue it's due diligence is pure carelessness and you don't get rewarded for vice

 

If you are organized and you pay attention to detail, carrying out each duty, then some might say you are professional

 

If you don't have a checklist, some might say that you are lazy, but I'm not sure if it's laziness or the lack of experience

 

If you work with me, I'm going to train you and you will quickly become more professional or you won't get my order

 

I know the job of the broker and I've been a broker for 25 years

 

You have a job to do

 

If you know your job, then do it and if you don't know it, I'll tell you, but you must learn quickly or I will get impatient

 

Nobody likes to repeat a lesson over and over; We don't have time for that

 

I'll mention it once and if you don't have a pencil in your hand, you will lose it

 

If you don't review yesterday's lessons, today, you lose both days and next week, you better go over your checklist again to make sure you did it all correctly

When a buyer is spending $500,000,000 on one order, you have to get it right or you don't get paid

 

This is what you learn over 25 years, if you're smart

 

Don't be lazy! Get your pencil out and take notes of what you have to do

 

My broker kit web site is there to help you and it's free, if you are wise enough to use it and learn from the experiences of others

 

--------------------------------------------------------------------------------

 

From: Ob Ajayi ob@(protected).com
Sent: Mon, December 28, 2009 12:30:56 PM
Subject: Broker Agrmt - OB & LW

 

Hi there Larry,

 

Compliments of the season.
I have been to your web site many times than I can now count. As I mentioned to you in our previous phone conversation in times past, this is a huge piece of work; infact, I don't have sufficient words to describe my appreciation of the loaded infor you have on the site. And the outpouring of love and appreciation by many visitors to your site as evident in their statements lend more credence to my words here as well. All I can say is THANK YOU, SIR!

 

The closest person to my impression of you on commodity trading is Davide Papa of FTN Exporting. The depth of your knowledge and wisdom is unparalled; why? ...because you are also willing to share with others so this industry may be a better place for us all to trade.

 

Attached herein is my signed Broker Agreement as a sign of my faith in you and willingness to do business with you because I have read through your materials and have come to believe in what you say. Uhm! this is accordance with what my pastor always says, "don't take what I tell you on the face value, go through the Bible to corroborate what I tell you." Although, I have been into many similar and not-so-similar businesses in the past 10-11 years, I have come to realize during my short period in this particular business, that though there are many trading concepts in the commodity biz, sadly and obviously, 98% will NOT lead to success. Yours belong to the other preferred 2%. Thank God I am not stupid, hence, the desire to be on the winning team; according to Davide Papa, 99% of commodity brokers chase deals with no luck/success for many years, I don't want to be part of that statistics, with your approach and his, I believe I stand a better chance to succeed; you really don't have to go through the school of hard knocks to learn in this business, especially from a team of like-minded people such as the ones you have around you, sir.

  

I wish you well in all your life endeavors, Larry, and please keep up the good work, the world needs more forthright businessmen and brokers like you. And, I ernestly look forward to hearing from you.

 

 

Regards,

 

O B Ajayi
Consto Trades, LLP
Arlington, TX 76017
Ph#: 817-691-1595

 

My reply:

 

December 28, 2009

 

Thank you OB, for the praise

 

The gift that you have received is not received by all, because it takes two

 

One writes and one reads it

 

You are a gifted individual, because you take the time and put forth the effort to read what has been written,

 

So you will benefit by the lessons learned by others who took the time to write them down so that others can benefit

 

I did not do it for praise, please understand, I did it for the pleasure of giving, for the benefits of organizing an industry which is very poorly organized and does not work well, most of the time

 

There is a procedure that should be followed because it is the best procedure we have developed so far

 

If anyone can make it better, their ideas and contributions are most welcome

 

As we collect additions from each who feels that his or her own experiences are worthy of putting into the record, we amass a vast pool from which everyone can draw

 

Imagine that we have a bank account and each person puts in a small amount and all can draw out the entire balance

 

If that were possible, then everyone would want to be part of that group, which owns the bank account

 

That's what we have with knowledge, for it costs nothing, but your time to withdraw the full amount from that account

 

No one has to make a contribution to that account, if they don't want to

 

Anyone can make a withdrawal, because knowledge is a gift from the creator and it is meant to be shared

 

When we give this gift to others, the benefits and ramifications just continue, like repercussions

 

Suppose that one person makes a sale and receives $10,000,000 in commission

 

How long will he or she enjoy the benefits of that money?

 

Perhaps a lifetime and perhaps several lifetimes, when you consider the children of the children of the original broker

 

So, we all should draw a lesson each day, write it down, review it periodically for our own benefit, in case we forget and we should pass it on to others, so that they might benefit

  

--------------------------------------------------------------------------------

 

From: GENR8 TRADING CC - Warren v.d.Westhuizen
Sent: Tuesday, June 23, 2009 11:22:21 AM

 

Hi Larry,

 

Thanks for the previous mail , much appreciated. A quick question , is there any possibility whatsoever that we can provide any past B/L and SGS that are sanitized? as this most definitely seems to a very common pre-requisite. Is it possible as it would most certainly strengthen my case with my respective buyers?. Please revert at your earliest convenience. Many thanks.

 

Kind Regards
WARREN VAN DER WESTHUIZEN
GENR8 TRADING CC
+27 71 133 5329 ( South Africa )
E-mail : (protected)@genr8trading.co.za
(protected)@gmail.com

--------------------------------------------------------------------------------

 

Warren,

 

Only a novice would ask you for such a thing

 

They think this proves something, but it can easily be faked

 

Just imagine that someone send one to a deceiver; He would make it his own and use it as proof, to others

 

They might also want to know the name of my source

 

How can you provide proof of a past shipment, without showing the seller?

 

Don't be fooled by this ploy to gain the name of my seller or get a document to fool others

 

I do not trust those who ask for this kind of document

 

I think they have bad intentions

 

No, they can't have and B/L or SGS, sanitized or not, but they can have a visit to the factory or refinery, if they sign the final contract and prove that they have money to pay

 

Nobody is going to ask anyone for money up front, as the crooks do The professionals in this business have one way of operating and the amateurs and crooks have other ways and you are discovering the difference

 

We have developed a procedure, to avoid mistakes and if this procedure is not the best, then tell me how we can improve it

 

Procedure is here:
--------------------------------------------------------------------------------

 

January 20, 2010

 

Fethi is new at brokering commodities

 

I explained that there are three major skills that a broker needs to survive here

1. Command of the English Language

 

2. An understanding of International Law

 

3. An undertanding of Standard Business Protocol

  

I don't mind broken sentences, as long as I understand what they mean

 

There are many language translators out there

 

Google

 

Langenberg

 

 

Type in a simple sentence, convert it to the language, then copy the foreign language and convert it back

 

If it says what you said, you can use it

 

If you can't understand what it says, then it probably won't be clear to the recipient

 

Don't get fancy with your sentences

 

Long, run on sentences won't translate, clearly

  

If you don't need a translator, to write in English, then you must write in clear sentences, to be understood

 

Most brokers fail at communication of basic ideas and following standard business protocol in letter writing, speech and discourse

 

There are many chat places

 

Skype

 

Yahoo Messenger

 

MSN

 

Google

  

If you can communicate clearly, you can send your ideas around the world, crossing many oceans and seas

 

You can make deals and make money, but if your sentences leave your associates confused, your deal can die

 

You can lose $6.3 million on one deal, so if you don't write in full sentences and if you can't communicate ideas clearly, then work on that, because it's very important to master #1, above

 

In #2, above, I have listed, 'An understanding of the law

 

If you don't know why the NCNDA is important or why it must be signed by the seller, you might pay $6.3 million to find out why the NCNDA deserves careful attention

 

All brokers are on the same team and all should work to protect the team

 

No conflict should arise out of the required signature of buyers and sellers, as stated in IncoTerms 2000 rules of international commerce

 

I try to explain all this on my web site

 

All you have to do is read it

 

If you are extremely lazy, you can still listen to it

 

Just download Firefox and download the Add On, which converts any web page to a PDF, then download the Add On, which converts text to speech and sit back and hear the page being read to you

 

You can use this on all contracts, to read the fine print

 

There is another program which is good

 

It's called ReadPlease 2003 and you can begin with the free version to try it out; I'm still trying it out and I use it every day and I've done so for years

 

Here, you load the text, with a copy and paste and you sit back and listen at the speed you like most; I'm up to 8, which is about 300 words per minute; I read a book per day now

 

If a book is 1,000 pages, it's not a problem; This thing devours contracts, like snakes, eating mice! It makes me powerful

 

People send me a complicated document and they are always surprised, when I send back an articulate assessment of what's written there and you can do the same!

 

So, Fethi is new at this and he sent me a signed NCNDA from a broker

 

He had to send it to her, three times, because she repeatedly told him that she did not get it

 

He sent her my revised form and what she signed was her own form and that form has typical problems

 

It requires all who sign it to use the ICC for arbitration and it has one to one damages, which I don't think is fair

 

The lawyers have to be paid and it's risky to sue anyone and it's very costly to fly here and there and stay in hotels, while you argue cases with attorneys

 

The damages should be triple, to make buyers and sellers think, not twice, but three times about circumventing a broker

 

Fethi knew that I don't approve of the standard form; We talked about it and he agreed that one to one damages and exclusive rights to arbitrate for us are bad ideas

 

Fethi had my NCNDA form and he sent it to this lady in South Africa, but she used her own form, instead and then Fethi forwarded it to me, as if I'm the boss and asked me what I think

 

Here is what I wrote:

 

I think you already know the answer, if your question is, Will this NCNDA work?

 

From the document:

 

ARBITRATION

  

All disputes arising out of or in connection with the present contract shall be finally settled under the rules of arbitration of the “International Chamber of Commerce (ICC)” by one or more “Arbitrators” appointed in accordance with the said rules.

Have your lady call the ICC to ask if they will arbitrate for non members..........We did this and were surprised by what they told us

 

The ICC does not arbitrate for non members, so you have to join the ICC first, all brokers must join; Plus, they charge an up front fee for arbitration, if they take your case

 

Have her ask the ICC what the up front fee is and then you will know why we can't use the ICC appointed arbitrator, as it states above

 

If she read this document, then she already knows that brokers can do nothing, if circumvented, except call the ICC and ask them to appoint an arbitrator and pay arbitration and membership fees

 

Yet, she doesn't know the cost of membership, because that is the first requirement; She doesn't know the cost of the arbitrator

 

When we called the ICC, we were quoted $88,000 which has to be paid, at the time of your request and the ICC told us that they take 30 days to consider the merits of a case

 

If you pay them $88,000 up front and your case is not strong, they could decide not to take it; What happens to your $88,000? Do they send it back with a Thank You!

 

Once anyone gets your money, it is unlikely that you will ever see any of it again and that's the way life is, if you ask me

 

For the above reasons, I have deleted the ICC from my contract, removed the requirement to use them as arbitrators and this removes the up front fee for membership and arbitration

 

Now I can take my signed contract to a private attorney and get legal help on contingency! That's powerful, because I have the capacity to act, when circumvented; Other brokers don't!

 

I tripled the damages so that I can afford to pay an attorney 40% of whatever he collects and still be left with 180% of the earned commission and brokers who work with me could still get paid

 

Being circumvented is routine in this business, because brokers are clueless about what's going on and they argue for the seller and refuse to get the NCNDA signed with a witnesss present

 

If you want to continue doing things as all other brokers do them, then you can spend 16 years in this business and not get paid for putting buyers and sellers together to make a deal

 

The revised document I sent you was not used, and therefore, not explained to the lady in South Africa and you must sell her on the concept of 'playing on a team' or she will not sign my form.

 

If she thinks that she can get my order by creating huge problems, with up front fees and the requirement that we all join the ICC, tell her that I have brokers who want her share of the commission and they might comply with my requests

 

She loses part of $5 /mt or some $6.3 million on the unleaded gasoline order and there is a D2 order for the same quantity, right behind the unleaded gasoline order; The buyer sent a valid ICPO

 

She will lose my orders and if she gets a third, each time, ask her if she would trade $2.1 million for this issue, because that's what she is doing; No cooperation, no deal from me

 

She insists on using the standard NCNDA form, with the requirement of ICC arbitrators and the $88,000 'up front fee', along with a 'one to one' damages clause

 

This form is unacceptable to me and if you understood why and if you explained it clearly to her, there should not be any dispute over the use of this poorly contrived form

 

All who understand will agree that we don't want arbitration, because both the ICC and the AAA (American Arbitrators Association) charge up front fees

 

The AAA does not have membership, so their up front fee is only $65,000

 

All of this is on my web page and if anyone will study it, they can avoid making mistakes which put all brokers at risk, as a result of using the standard form that is floating around

 

The obvious problem is that brokers don't read; They don't understand; They don't act to change anything

 

Some have been in this business for 16 years (Gordon, friend of Jason) and still they don't know anything useful

 

The most useful information for the new broker is that the NCNDA must succeed in protecting brokers

 

If there is an up front fee of $88,000 and brokers can't pay their phone bill and they are borrowing money to survive, how can they pay this fee?

 

They are completely at the mercy of the seller and buyer, because they have money and they know what brokers don't know

 

Buyers and sellers are swift to exploit their advantages

 

Every one of them will go around you; Some will do it, on the roll over, when you are supposed to be paid another $6.3 million as a group; Many of them will circumvent brokers immediately after they get the ICPO, without signing a valid NCNDA

 

Be wise! Be careful! Be paid!

Broker Duties

ATTENTION

ALL BROKERS, FACILITATORS & INTERMEDIARIES

Please use the following outline to determine your readiness for further discussions:

Verbal Agreement on Price

1. Has the buyer shopped around? Yes No
2. Has the buyer received price quotes? Yes No
3. Are the buyer's price quotes realistic? Yes No
4. Has the buyer's best price quote been verified? Yes No
5. Is the buyer satisfied with the price quotes he has received? Yes No
6. Is the buyer ready to make the purchase? Yes No
7. If we beat the buyer's best price quote, will the buyer buy, today? Yes No
8. Did you explain to the buyer that the PB insurance will be 2%? Yes No

Review Documents

1. Is the buyer a broker? Yes No
2. Can the buyer pay? Yes No
3. Does the order have product specifications? Yes No
4. Is there a company seal? Yes No
5. What did you learn, from the seal? 

NCNDA

1. Have all brokers signed the NCNDA? Yes No
2. Has the buyer signed the NCNDA before a notary? Yes No

IMFPA

1. Have the brokers agreed on commission split? Yes No
2. Have the brokers filled out their bank account numbers on the IMFPA form? Yes No

Which of the following do you have?: LOI or ICPO

1. Do you think the documents were carefully prepared? Yes No
2. Do the documents appear to be prepared by a real buyer or a broker? Yes No

PURCHASING PROCEDURE

As brokers, intermediaries, and facilitators, our duties include ensuring both parties ultimately agree to a set of procedure that will be acceptable to all concerned; especially if the two parties are dealing with each other for the first time. Below is a list of our preferred procedures as submitted in previous deals by sellers and buyers.

We hope interested parties from hereon would appreciate these procedures and be ready willing and able to accept after due consideration.

Procedure Checklist

1. After a successful discussion about price and product specifications, Buyer issues either
• LOI or BC
• authorization to verify funds
• authorization for soft probe
• and signs ICPO (irrevocable corporate purchase order), NCNDA (non circumvention, non disclosure agreement) and IMFPA (irrevocable monetary fee protection agreement)
2. Seller confirms the ICPO or makes a counter offer, with an FCO (full corporate offer)
• availability
• price
• payment terms
• delivery schedule
• and signs IMPF
3. Buyer
• confirms the FCO or issues a counter offer
• buyer signs and seals
4. Seller
• sends Draft Contract with
• full terms and
• conditions
5. Buyer
• signs the Draft Contract with notary
• seals it and sends hard copies of the Draft contract back to our Manufacturer by fax or email
6. If both Buyer and Manufacturer agree, then
• Manufacturer will mail 5 original copies to the Buyer via DHL or FedEx
7. Buyer forwards to Manufacturer
• Pre Advise SBLC orPartial Bank Guarantee
• irrevocable
• transferable
• unencumbered
• unconditional
• 100% at sight
• in the name of our main manufacturer
8. Seller
• receives the Pre Advise Bank Guarantee by fax or mail and
• sends a copy to our main manufacturer by fax or email
9. Seller sends proof of product
• in form of the letter from the manufacturer/plant
• confirming the product to the buyer's bank and posts a 2% Performance Bond for the transaction
10. Loading initiates as per schedule supplied in the contract
• 30 to 45 days from date of receiving an operative payment instrument

OR, Our preferred term - CIF:

1. Seller
• issues Contract with Full Banking Coordinates & Proof of Product (POP) 
2. Buyer & Seller
• sign the SPA contract incorporating their full banking details.
• parties deposit copy of properly executed SPA with their banks for records & info
3. Buyer returns the signed SPA with:
• a corporate undertaking to confirm RWA
• the RWA shows that Buyer is to issue by SWIFT, BG, or MT760 POF after receipt and confirmation of the issued ETA by Buyer's storage tank farm
• Buyer provides end-buyer's Discharge port facility
4. Seller:
• Within 72 hours, Seller verifies POF & Buyer verifies POP respectively
5. Loading commences
6. Delivery at Buyer's preferred Port
7. Buyer's Inspectors 
• 24 hours after berthing, Buyer's Inspectors conduct Q&Q, sends certified report to both Seller & Buyer
8. Seller
• collates all cargo info and marine docs and
• swift same to Buyer's bank for payment
9. Buyer's Bank
• Within 72 hours, Buyer's bank releases ALL payments including commissions by SWIFT to Seller and all middlemen.

Other Terms:

1. SELLER or seller's agent
• issues soft offer
• SCO to Buyer.
2. BUYER issues ICPO to Seller.
• first response
3. SELLER
• issues draft contract to Buyer.
4. Seller & Buyer
• Both parties sign the contract.
5. SELLER issues full POP, Allocation Number and Tank receipt via seller’s bank.
6. BUYER’S bank issues irrevocable revolving transferable documentary letter of credit.
7. SELLER issues 2% PB to activate buyer’s payment instrument.
8. Payment instrument activated.
9. Delivery Commences as scheduled, within 20 to 30 days.

BROKER AGREEMENT

First, we would like to thank Larry Wingo, a veteran broker we are proud to associate with, who has been incredibly generous with his unparalleled knowledge and wealth of information in commodities brokerage. We view his consent to use many of his writings here, and his immense contribution to the enlightenment of brokers worldwide in general as absolutely phenomenal. We hope that as we publish these writings in our blogspot, we help further his cause, which is focused on educating all brokers to be better and more productive traders worldwide.

Below is a sample of an agreement document that may be used by two or more brokers, intermediaries, facilitators, consultants, free agents, mandates, etc. as they make efforts for the first time to negotiate, mediate, and/or facilitate a deal. Its a good way to develop trust and gain integrity. Please feel free to use this document, we hope this helps make this industry a lot better.

BROKER AGREEMENT

Whereas all brokers signing this agreement cooperate in order to bring about a favorable conclusion to each transaction in which they are engaged, brokers sometimes take shortcuts, which either border on fraud or are outright fraudulent and designed to trick or mislead others in the transaction. Often, there is no penalty for these unscrupulous acts and so to balance the risk and reward relationship of such deeds, broker agrees to the following:

Consto Trades, LLP (dba Consto Commodity Trades) reserves the right to withhold part or all of the commission of any broker who violates the trust of others by:

1. Telling lies to others involved in the transaction

2. Forging a signature

3. Producing a fake document

4. Unnecessarily delaying documents, vital to the transaction, when requested

5. Omitting facts or withholding information which affect the outcome of the transaction

______________________________________________________

Lies

Telling lies can cause delays and lead others to believe things which are not true and this wastes everyone's time in a transaction.

______________________________________________________

Forging Signatures

Brokers often take the expedient path by signing for others. This can be very costly, when the document is the NCNDA and they buyer knows he or she did not sign it, because it gives the buyer the idea that he doesn't have to pay brokers. What consequences would there be if a buyer used information provided to him or her if that information was given, without the protection of an NCNDA? You won't be able to convince a court that a false signature is real. Signatures can be compared and when it is found that they don't match, you have lost all the money you paid to attorneys to handle your case. Often, lawyers know that you don't have a case, when they take your retainer.

______________________________________________________

Fake Documents

It is not going to serve anyone's ultimate purpose for you or any other broker to fake a document as important as an L/C, BCL, POP or LOI. The list is not limited to these. Experience teaches that each one has a myriad of stories which can be told by those who have wasted their time in a transaction, because some unscrupulous broker was trying to expedite things or get past a sticking point, by faking a document. This is fraud. It's illegal and cannot be tolerated. There must be an equal threat to the benefit of cheating others by faking documents and so I have included a clause on the IMFPA which says, in essence, If you fake a document, it's going to cost you part or all of your commission, so don't even think of faking any document, no matter how trivial you might think it is.

______________________________________________________

Unnecessary Delays in the Delivery of Important Documents

Time is of the essence, because the world is a competitive place and buyers are shopping for the best deal and brokers are eagerly trying to provide products in order to get paid. Commissions can be huge and so it is imperative that each broker do his or her best to provide documents in a timely fashion.

You may not agree with the sequence of events in the procedure, but there are important reasons why this order has won acceptance. The IMFPA must be prepared at the onset of any transaction, because brokers lie about how many have to be paid, at their end of the transaction. It's easy to lie about a person, but it's not so easy to come up with a passport number, bank account, address and phone number. For this reason, the IMFPA must be completed, at the same time as the NCNDAs. Once the NCNDAs are signed, there is no reason to withhold the LOI, ICPO or any other document, important to the transaction.

______________________________________________________

Omitting Facts and Withholding

If the buyer is intending to use a non-transferrable L/C, sellers want to know, in advance and so do all the brokers in the transaction, so they know how difficult it will be to deliver the target price, with this impedance. When brokers meet with resistance, because of this fact, they will simply drop it from the presentation and this is unfair to others. We get down to the finish line and we can't cross, because the broker left out an important fact, which affects the feasibility of the transaction. There have to be consequences for such omissions.

______________________________________________________

I hereby agree to cooperate with all parties of each transaction, in an open and honest manner, telling no lies, forging no signatures, faking no documents, delaying no required documents beyond what is reasonable or necessary and I pledge to tell all that I know, which might have an impact on the transactions in which we cooperate. I understand that I risk part or all of my commission by breaking this agreement.



Print Name: ______________________________________

Sign Name: ______________________________________

Address: ________________________________________

Phone: __________________________________________

STAMP/SEAL: