Letter of offer

After considering the enquiry for some time the prospective seller sends an offer in reply.

The offer usually quotes the price and stipulates terms of delivery, terms of payment and discounts, packing, transportation costs, time of delivery and some other necessary details.

When sellers quote prices in their offers they usually state on what terms at this price, they will deliver the goods. The supplier trying to attract the attention of potential clients or looking for new clients for special products or their range will speak about a firm offer which stipulates some specific conditions, such as a deadline and a system of discounts. The price will certainly depend on the terms of delivery.

The most popular terms of delivery in foreign business transactions are: Ex-mill, ex-works (from a plant or factory); fob (free on board); for (free on rail); cif (cost, insurance and freight); cip (cost, insurance and payed to…); c & f (cost and freight).

If the goods are offered on ex-mill terms the price will include the cost of the goods only.

If the goods are offered on fob terms the price will include the cost of the goods and transportation expenses to the port of shipment only.

If the goods are offered on for terms the price will include the cost of the goods and transportation expenses to the railway station only. These terms are similar to fob terms. The only difference is the mode of transportation. In case fob terms the goods are shipped on board ships or planes. In case of for terms the goods are transported by railway.

If the goods are offered on cif terms the price will cover the cost of the goods, insurance expenses and freight or transportation expenses, to the port of destination.

If the goods are offered on cip terms the price will include the cost of goods, insurance expences and freight to the place of destination.

If the goods are offered on c & f terms the price will cover the cost of the goods and freight to the port of destination.

* The price is USD 2, 000.00 per ton fob NewYork.

*The quoted price is GBP 1, 200.00 each cif Murmansk.

*We can offer the goods at the price of GBP 78.00 per metre c& f Liverpool.

*The goods are offered on for basis.

Offers usually state the terms on which the goods are to be paid, or terms of payment.

Terms of payment usually mean the currency, time of payment, mode of payment and many details.

In foreign trade transactions various modes of payment are practiced, among which the most popular are as follows:

by a bank transfer;

by a letter of credit;

for collection;

by drafts;

on an open account.

Sometimes mixed terms are practiced. That depends on the value of the goods, volume of the goods, time of delivery and many other factors.

1. Ten percent of the total sum should be paid in advance by telegraphic bank transfer.

2. Fifty percent of the total sum should be paid by telegraphic banker's transfer within 30 days after your bank receives shipping documents.

3. Forty percent of the total sum should be paid by drafts at 90 days' sight.