Trading & Deal Structuring
A foundation for connecting product quality, price, payment and delivery in a physical commodity transaction.
Define the deal in one place
| Commercial term | Make it explicit |
|---|---|
| Product | Grade, impurities, size, moisture, quantity tolerance and packaging. |
| Price | Currency, unit, fixed/formula basis, reference period and adjustments. |
| Delivery | Incoterm, full named point, version, shipment window and notices. |
| Quality settlement | Sampling, laboratory, provisional/final assay and dispute process. |
| Payment and title | Amount, trigger, due date, security and when title transfers. |
| Non-performance | Governing law, dispute process, rejection, delay and termination provisions. |
Read the source: ICC · What the rules cover ↗
Compare payment mechanisms
| Mechanism | What to understand |
|---|---|
| Advance payment | Buyer pays before performance and carries supplier performance risk. |
| Open account | Seller ships before being paid and carries buyer payment risk. |
| Documentary collection | Banks handle documents and collection instructions; this is not a bank payment guarantee. |
| Documentary credit | A bank undertaking is tied to complying documents and its terms. It does not certify the physical quality of goods. |
Read the source: International Trade Administration · Trade Finance Guide ↗ · International Trade Administration · Documentary collections ↗
Bridge the reference price to settlement
An exchange quotation, an assessed price and a privately negotiated offer can describe different products. For a concentrate, payable content, treatment/refining charges, impurities and the agreed quotation period can change settlement materially.
Assess ability to perform
Establish legal identity, authority to sell or buy, ownership/control, source of goods and practical ability to finance and execute the trade. Validate important evidence independently and check whether the proposed route and payment channels are usable.
Map the points at which money, goods, risk and title move. Where one moves before the others, identify the exposure and the agreed protection.
Read the source: OFSI · Importer and exporter guidance ↗
Continue learning
Read the source: International Trade Administration · Trade Finance Guide ↗ · International Trade Administration · Documentary collections ↗ · ICC · What the rules cover ↗
Educational overview. Apply the current rules, contract and cargo-specific requirements to each shipment or project; this is not a substitute for specialist advice.