What a standard procedure of a CIF transaction looks like.

PAYMENT TERMS

a. The payment will be in US Dollars and made by irrevocable, transferable, confirmable, Letter of Credit (L/C) / Standby Letter of Credit (SBLC) payment of one (1) month’s value shall be made by buyer to seller as guarantee for the standby letter of credit (SBLC) / Letter of Credit (L/C) payment will be made in currency of US Dollars and will be issued from one of the World’s Top 25 Banks acceptable to Seller’s Bank.

b. Quantity, as assessed at the loading port by the Independent Inspector or Surveyor Company, and price as determined as per (the relevant clause of this) contract, will be used to compute the Seller’s invoice.

c. The bank instrument is only meant to be used as collateral for the shipment that is to be made, each shipment invoiced will have to be paid upon each delivery.

d. Payment for each delivery will have to be made by Cash Telegraphic Transfer T/T within 3 banking days after inspection report equivalent at destination port to sellers designated bank.

e. Payment for the Cargo shall be made 3 (three) days immediately after the product has been discharged into the Buyer’s storage tanks or destination port of the buyer and Quality and Quantity have been confirmed as being correct by the Independent Inspector or Surveyor Company, AT SIGHT.

f. In the event payment due date falls on a Saturday or a New York banking holiday other than a Monday, then payment will be effected on the preceding New York banking day.

PAYMENT PROCEDURE    

1. Buyer and Seller sign and seal this Contract including banking coordinates and exchange the signed copy by electronic mail. The electronic signed copy by both Parties is considered legally binding and enforceable and must not be changed. The executed SPA is lodged in their respective banks.

2. Buyer bank issues via swift a pre-advice/non operative, irrevocable, transferable divisible confirmable Letter of Credit / Standby Letter of Credit (SBLC) to Seller’s bank in favour of seller.

3. Within 5 working days of the receipt of the buyer’s bank receipt of the swift copy of buyers Letter of Credit (L/C) / Standby Letter of Credit (SBLC),  Sellers bank issue an operative 2% Performance Bond (PB) to buyer’s bank which will automatically activate the buyers Letter of Credit (L/C) / Standby Letter of Credit , and the buyers Letter of Credit (L/C) / Standby Letter of Credit (SBLC) become operative.

4. Upon receipt of buyer’s L/C by swift, Seller shall nominate and charter the vessel to be loaded in the name of Buyer as soon as all the procedures above are met as agreed. After loading, seller shall send loaded vessel documents to buyer for confirmation.

5. Upon buyer’s confirmation of loaded vessel details, seller vessel sails to buyer’s port of discharge, issues MARINE ATB / ETA to buyer’s independent inspectors to board seller’s vessel for Q n Q

6. Upon successful completion of Q n Q at the destination port, report is sent to both parties for confirmation, and the buyer/buyer’s bank by Swift wire pays cash to seller and all the intermediaries as stated and agreed in this purchase Agreement and the original cargo documents is handed over to the buyer through his bankers that paid for the product. Payment for the Cargo shall be made 3 (three) days immediately after the product has been discharged into the Buyer’s storage tanks or destination port of the buyer and Quality and Quantity have been confirmed as being correct by the Independent Inspector or Surveyor Company, AT SIGHT.

7. Documents

Some of the documents which, will be handed over to the Buyer for confirmation that the product has been discharged are as listed below:

Original and 3 copies of commercial invoice.

Full set of 3 original and non-negotiable copies of bill of lading

1 original and 3 copies of Certificate of Quantity

1 original and 3 copies of Certificate of Quality

1 original and 3 copies of Certificate of Origin

1 Original and 3 copies of master’s receipt of samples

1 Original and 3 copies for master’s receipt of each one-copy document, excepting commercial invoice

1 Original Ullage report issued at loading terminal.

1 Original and 3 copies of cleanliness report at loading port.

Any other documents pertaining or related to the current transaction, duly signed by the authorized person(s) and as required by and specified in the irrevocable Letter of Credit.

8. Taxes, Duties & Charges

Seller shall pay ordinary agency fees, towage, pilot age and similar port charges, port duties and after taxes against Vessel at the loading Port.

               CIF PROCEDURE:

A.       Seller and Buyer sign SPA and deposit with their respective banks

B.       Seller sends POP to the Buyer for verification. See Appendix

C.       Buyer through his bank sends unconditional SBLC/BG/MT103.23 to the SELLER'S bank from a prime bank

D.       Seller gives 2% PB to activate the LC/BG/MT103.23

E.        Seller's captain send NOR/ETA to the Refinery

F.        Buyer conducts QNQ at the port of discharge

FOB PROCEDURE:

1.        SELLER AND BUYER EXECUTE THIS CONTRACT AND LODGE THE HARD COPIES OF THE CONTRACT WITH THEIR RESPECTIVE BANKS

2.        SELLER GIVES NNPC LICENSE & POP TO THE BUYER THROUGH HIS BANK TO CONFIRM ON THE SHELL SCREEN

3.        BUYER ISSUES A NON OPERATIVE LETTER OF CREDIT TO THE SELLER'S BANK THROUGH HIS BANK

4.        SELLER THROUGH HIS BANK ISSUES OPERATIVE 2% PB TO THE BUYER THROUGH HIS BANK TO ACTIVATE THE LETTER OF CREDIT

5.        BUYER SENDS VESSEL PARTICULARS LIKE Q88 AND PRE-CHARTER DOCUMENTS TO THE SELLER, ETC

6.        SELLER CALLS IN THE VESSEL FOR LOADING AND CAPTAIN OPENS COMMUNICATION WITH THE TERMINAL

7.        UPON ARRIVAL  AT THE LOADING POSITION, SELLER WHO BEARS THE COST OF LOADING, MUST LOAD THE VESSEL

8.        BUYER CONDUCTS HIS OWN QNQ INSPECTION, USING HIS OWN NOMINATED INSPECTION SGS AGENT. COPY OF THE Q&Q REPORT IS ISSUED TO THE BUYER AND SELLER SIMULTANEOUSLY. AND BUYER SETTLES THE SECURITY FEES AND LOGISTICS

9.        SELLER ISSUES HIS INVOICE BASED ON INSPECTOR'S REPORT

10.    PAYMENTS SHALL BE RELEASED IMMEDIATELY UPON RECEIPT OF THE RESULT OF Q&Q OF THE PRODUCT AT BUYER'S VESSEL POSITION, BUYER SHALL BE RESPONSIBLE FOR THE FINAL Q&Q. SELLER SHALL RELEASE THE VESSEL UPON CONFIRMATION OF PAYMENTS INTO THE SELLER'S ACCOUNT BY THE BUYER'S BANK AND ALL THE INTERMEDIARIES AFTER FINAL Q&Q. ALL PAYMENTS MUST BE IN GOOD, CLEAN US DOLLARS OF NON-CRIMINAL ORIGIN.

           TTO PROCEDURE:

A.       Seller and Buyer sign SPA and deposit with their respective Banks

B.       Seller sends POP to the buyer for verification: See Appendix and past performance

C.       Buyer through his banks sends MT103 or Unconditional SBLC to the SELLER'S Bank from a prime Bank

D.       Seller gives 2% PB to activate the L/C or MT103/23. Vessel nominated on buyer's name

E.        Buyer conducts QNQ in any West African coast of his choice

F.        Result of QNQ is sent simultaneously to both buyer and Seller for confirmation

G.      Seller assists buyer to re-charter vessel and all documents handed over to the buyer

H.       Buyer makes payment through Swift Transfer to the SELLER'S Bank and to all the intermediaries as stated on the SPA.

           TTT PROCEDURE:

1.        SELLER AND BUYER SIGN CONTRACT AND LODGE WITH THEIR RESPECTIVE BANKS

2.        BUYER GIVES SBLC TO THE SELLER

3.        SELLER GIVES 2% PB

4.        BUYER GIVES VESSEL DETAILS

5.        SELLER CALLS IN BUYER'S VESSEL FOR LOADING

6.        SELLER MUST LOAD

7.        BUYER CONDUCTS QNQ

8.        BUYER EFFECTS PAYMENT AND VESSEL DEPARTS FROM TERMINAL.