purchase order : exporter , importer, buying agent

Purchase OrderRitu Jain

What is a Purchase Order

Export order is a document communicating

decision of the foreign buyer to purchase certain

item(s) from the exporter .

PROCESSING OF AN EXPORT ORDER

Nature of export order, export agreement and

export contract

The export order represents an “offer to sell” made by the exporter and its ‘acceptance’ by the foreign buyer.


It is defined as exchange of promises by the

parties to the agreement.

The exporter promises to supply the goods as

per quality specifications and other terms and

conditions negotiated with the buyer of the

goods.


The promise of the buyer is to make payment

to the exporter when he/she supplies the goods

as per the terms and conditions of the export

order. The export agreement could be written in the

proper legal format or it could as well be

evidenced by the exchange of letters between

parties.


Export order, export agreement, export contract mean one and the same thing.

The sequence of steps are as follows:1. The exporter locates a trade enquiry.

2. On receipt of the trade enquiry , exporter sends the company profile , product profile and promotional literature of the product range to know the interest of the buyer.

3. The buyer may like to have details of a certain product .

Process of Securing Export Order

The sequence of steps are as follows:4. The exporter sends the quotation in respect

of the product of interest to the buyer. This

contains the basic details like FOB price, mode

of payment, photograph of the item along with

the specifications and the likely delivery time.


The sequence of steps are as follows:5. The buyer on receipt of the above- puts

forward the requirements as regards the design , size , finish or other specifications of the product in view. Once the product is identified the process of negotiations of the other terms and conditions begins.


The sequence of steps are as follows:6. The exporter sends the Performa Invoice to

the buyer setting out in detail the terms and conditions negotiated between the two parties. This Performa Invoice represents the “offer to sell” made by the exporter.


The sequence of steps are as follows:7. The acceptance by the importer can be in the

form of the exchange of letters.


Terms and conditions of an Export Order

This varies from order to order depending on

the nature of the product, parties involved and

so on.


Following are the standard clauses:1. Product and its description2. Product specifications stating its quality3. Price: FOB/CIF etc.4. Quantity5. Payment terms: Letter of Credit, Advance

Payment etc.6. Delivery Schedule: Time period:

partial /complete dispatch7. Mode of shipment: Air/Sea /Road/Post8. Type of Shipment: Direct /Trans-shipment


Following are the standard clauses:9. Inspection10. Labeling, packaging, packing, and marking

requirements.11. Insurance : by exporter/importer12. Documents required13. Escalation clause: Sharing of increase in cost.14. Force majeure Clause: Clause providing for excuse of

non-performance due to acts of God.15. Arbitration Clause: Clause for settlement of dispute16. Fines/Penalties17. Applicability of Law


1. Both parties hold negotiations with regards to the above points to conclude the business deal.

2. After which a letter of thanks goes out to the importer by the exporter for placing the order. The exporter should also give a confirmation on the order placed after a scrutiny of the order


1. Item (product) – Is the order placed on the same product on which the offer was sent and exporter is still in the position to supply the goods.

2. Sizes and specifications should be same as per offer.

3. Pre-shipment inspection requirements can be met. If the buyer requires the inspection to be done by an agent /agency of his choice, financial, legal and physical aspects of inspections should be examined and communicated to the buyer.

Scrutiny of the order placed :

4. Payment terms are acceptable to both parties.

5. Special packaging, labeling and marketing requirements should be noted for compliance and special care should be taken for packaging for the goods required for direct sales to the consumers. Packaging material should be environmental friendly.


6. Shipment and delivery date in accordance with the production plan of exporter: a) whether part shipment is allowed , b) trans-shipment is permissible c)port of shipment/destination is same.

7. Who will do the insurance and conditions of insurance.


8. Documents required by the buyer . Some documents requiring special attention ; a) Commercial invoice b) Whether any kind of certification is required on the

Commercial Invoice by any authority – Embassy or Consulate of the foreign country.

c) What kind of bill of lading is required.d) What kind of certificate of origin is required? Is it

required to be issued by a trade association or chamber of commerce .

e) Number of copies of the packing list required.f) Whether cargo insurance is required.


Explanations of the Terms commonly used:I. Bill of Lading – is a document which has the name of the carrier and to be signed or authenticated by – a) the carrier or the named agent for or on behalf of the carrier. b) the master or a named agent for or on behalf of the master.

II. FOB – Freight on Board

III. Letter of Credit ( Documentary Credit) The assurance of payment is provided by the importer’s bank in the form of Letter Of Credit or the Documentary Credit.

Once all the clarifications have been received a

letter of confirmation should be sent.

purchase order : exporter , importer, buying agent

Retail

export order export

export agreement

export contract

export orderthis

foreign buyer

product profile

purchase orderexport

certain product