Sunflower Oil Procurement Protocol: Buyer’s Strict Compliance Required for Seamless Transaction Execution

In a standard international trade transaction, the process begins with the buyer submitting an Irrevocable Confirmed Purchase Order (ICPO) along with verifiable Proof of Funds (POF). This step is crucial to demonstrate the buyer’s seriousness and financial capability. Upon receipt, the seller issues a draft Sales and Purchase Agreement (SPA) and a Proforma Invoice (PI) for the buyer’s review and signature.

Once the buyer signs and returns both documents, the next step involves the financial instrument. The buyer is required to issue an Irrevocable, Non-Divisible, and Non-Transferable Standby Letter of Credit (SBLC) via MT760, strictly following the seller’s bank verbiage and procedural guidelines. This SBLC must be issued by a top 50 world bank, and importantly, it must be owned—not leased—by the buyer. The buyer’s bank must first send a Ready, Willing, and Able (RWA) message for the seller's bank approval before the SBLC can be transmitted. In exchange, the seller provides a 2% performance guarantee applicable to monthly shipments.

Non-performance by either party triggers a penalty clause amounting to 2% of the total or annual contract value, reinforcing the commitment on both sides. Payment for each shipment is to be made via Telegraphic Transfer (TT/MT103) after a successful quality inspection conducted by CCIC or SGS at the destination port. This inspection report serves as the trigger for the seller to collect payment.

Additionally, all responsibilities at the destination port—unloading, demurrage, and any related costs—are fully borne by the buyer. The seller assumes no liability for risks or damages once the vessel has arrived. This clause further secures the seller’s position post-shipment, ensuring that logistical responsibilities and any delays are not at their expense.

Overall, the structure of this transaction reflects a high level of financial security, risk mitigation, and clearly defined responsibilities to ensure smooth execution and protection for both parties.