Learning Objectives

Chapter5 Business Negotiation The students should understand concepts of enquiry, offer, counter-offer and acceptance. [Important and Difficult Points] How to write some letters on enquiry, offer, counter-offer and acceptance. How to sign the contract. Learning Objectives

Chapter5 Business Negotiation An enquiry is a request for business information, such as price lists, catalogues, samples, and details about the goods or trade terms. 1. an enquiry

Chapter5 Business Negotiation 1. an enquiry If the importer wants to have general information of the products or commodities, which the exporter is in a position to supply, he may ask the exporter to send him a catalogue, a brochure, a price list & samples.

Chapter5 Business Negotiation 1. an enquiry This is a general enquiry. If the importer intends to purchase a certain product or commodity, he may ask the exporter to make an offer or a quotation on this product. Such kind of enquiry is called a specific enquiry. The following are examples of letters about enquiries.

Business Negotiation Dear Sirs, We have been doing business with them for just over five years on quarterly account terms and can say that their obligations to us have been punctually met at all times. Although their credit with us has never reached the level mentioned in your letter, we would have no hesitation in granting them this amount, if asked. This information is given without responsibility, of course. Yours faithfully,

Business Negotiation [2] Seller’s letter to trade association Dear Sirs, We have been referred to you for information on their credit standing by Messrs .Lyle & Co. who have asked us to supply goods to the value of 1 100 pounds against their first order. We should be very grateful to you for any information you can give us about their activities and the scope of their transactions, as we hear that they may place further and larger orders. Your faithfully,

Business Negotiation [3] Seller’s letter to his bank manager Dear Sirs, I am thinking of granting credit to Messrs…of...of whom I have only slight knowledge gained during a few months of trading on a cash basis. Yours faithfully,

Chapter5 Business Negotiation 2. an offer An offer is a proposal made by an offer to an offee in order to enter into a contract. These terms mainly include name of commodity, brand, specifications, quantity, price, packing, payment and shipment,etc. An offer may either be a firm offer or a non-firm offer.

Chapter5 Business Negotiation A firm offer is a kind of offer which is made to a specific person or persons to express or imply a definite intention of the offer or to make a contract under a clear, complete and final trade terms. 2. an offer

Chapter5 Business Negotiation Once it is unconditionally accepted by the offeree within its validity, this firm offer cannot be revoked or amended and is binding on both offer or and offeree. Contrary to a firm offer, a non-firm offer is an offer without engagement. It is unclear, incomplete ; reservation 2. an offer

Chapter5 Business Negotiation A reply to an offer which purports to be an acceptance but contains additions, limitations or other modifications is a rejection of the offer and constitutes a counter-offer. Therefore, a counter-offer is, in fact, a new offer and, at the same time, the original offer lapses. 3.counter-offer

Chapter 5 Business Negotiation On receiving the counter-offer, the offeror may weigh the advantages and disadvantages and decide to accept or decline it according to the specific situation. He may also make a re-offer to put forward some new terms or conditions. This is called an "anti-counter-offer". 3. anti-counter-offer

Chapter 5 Business Negotiation Acceptance is a statement made by or other conduct of the offeree indicating unconditional assent to an offer. A contract is concluded once the offer is accepted.An acceptance should abide by the following requirements: 4.Acceptance

Chapter 5 Business Negotiation An acceptance must be absolute and unconditional. An acceptance can be made by an act performed by an offeree.An acceptance must be clearly expressed by the offeree's verbal or written statement. An acceptance must be made by offeree within the valid period of a firm offer. 4.Acceptance

Chapter 5 Business Negotiation A contract is an agreement between two or more parties that is enforceable in a court of law. The names that often appear are contract, confirmation, agreement and memorandum. 5. Signing Contract

Chapter 5 Business Negotiation The former usually consists of commodities, specifications, quantity, packing, marking, price, shipment, port of shipment and port of destination and payment as well as those clauses concerning insurance, commodity inspection, claims, arbitration and force majeure, etc; while the latter only includes several main items only. 5. Signing Contract

Terminology Practice Quotation: An offer to sell goods at a stated price and under stated terms. Bid：The price a buyer is willing to pay to buy certain goods Discount：An amount of money deducted from the selling price of goods3 for various reasons．

Terminology Practice Firm order： A written or verbal order that cannot be canceled by either buyer or seller without payment of a substantial penalty． Catalogue: A booklet or pamphlet giving details of goods，such as prices and conditions of sale，often i11ustrated． Brochure：A small booklet or pamphlet，often i11ustrated，giving details of a company’s or organization’s services or goods for sale．

Exercises I. Give a special English term to each of the following definitions. 1. __ is a country to which an exporter intends to export his commodities. 2. ____ is a limit on the quantitative amount of a product allowed to exported out of a country in a year. 3. __ is an attitude toward settling small issues before deciding on principles. 4. __ is the price given by a trader who is willing to buy or sell commodities at that price.

Exercises 5. __ is a process usually made by the buyer of asking the seller about the terms of a sale. 6. __ is the process in which the seller and the buyer discuss about the trade terms in order to reach an agreement about the sales of goods. 7. __ includes a series of activities by a company for making its new products generally known and well liked, usually by participating in the export commodity fairs, distributing catalogs, booklets, and samples among his potential customers, etc.

Exercises II. Judge whether each of the following is or intends to make an offer, an invitation to making an offer, a counter-offer, or an acceptance. Translate 1, 2, 3 into Chinese: [1] Dear Sirs, Thank you for your letter of April 5, in which you sent us details of your product MH-to. We have now seen the samples and are prepared to give them a trial order provided you can guarantee shipment on or before September 15. The enclosed order is given strictly on this condition, and we reserve the right of cancellation and refusal of delivery after this date. Upon receipt of your acceptance, we will open a letter of credit immediately. Yours sincerely,

Exercises [2]Dear Sirs, We enclose a stock order for various merchandise of sundries. This order is not particularly urgent and the shipment within three months would be quite satisfactory, so we would like you to make a careful examination on the quality before shipment. From the note on our sheet you will see our approximate price limits. While we leave it to your discretion, we do not want to exceed these limits in any case. Please advise us when our order is completed and forward the shipping documents immediately. Yours faithfully,

Exercises [3] Dear Sirs, Thank you for your quotation and samples of July 8. While appreciating the good quality of your article we find the prices rather high for the market we wish to supply. We have also to point out that very good articles are now available here from several French manufacturers, and all of these are at prices from 15%--20% below yours. We should like to place our order with you, but ask you to consider whether you can make us a favorable offer. As our order would be worth around US$800,000, you may think it worthwhile to make a concession. Yours faithfully,

Exercises [4].Your newly-developed STAR PRINTING MACHINE FK-6 displayed at Paris International Trade Fair interests us deeply. We would like to have three units as trial order. Please quote per unit C & F Tokyo for shipment in July, awaiting early reply.

Exercises [5]. On behalf of our principals we exceptionally bid firm Long-shaped White Rice, 10 PCT more or less at buyers' option, 6,000 MT 35 PCT broken USS 227 combined with 60,000 MT 25 PCT broken USS 289 both FOBS Shanghai gross for net equal monthly shipment from October to December other terms as usual. [6].Accept but D/F 30 days.

Exercises I: We are interested in your silk garments, which are well received on the American market. Now I’d like to have some information about your business terms. E: OK, here are some details in price lists, catalogue and some samples. What kind of silk garments do you like? I: We’d like the silk garments printed. Please give us an offer for 100 dozens silk garments printed. By the way, can you tell us the delivery time, the terms of payment and so on, as usual terms. We hope you’ll see you way to give us a low price.

Exercises E: It’s something like this: 100 dozens at the price of US$240 per dozens CIF New York, including 5% commission. Shipment will be made in July. We’ll keep our offer open for 5 days. I: How about the terms of payment? E: Confirmed irrevocable letter of credit, by draft at sight. I: In fact, your unit price is 20 dollars higher what we can accept, as compared with the international market level. Could you please descend the price from $240 to $220 per dozen?

Exercises E: We only make the price down a little. You know, our price is too favorable that the customers all over the world would like to buy the garments. Is it ok about $ 230 per dozens? I: With a view to long-term interest, I agree to conclude the transaction at the price you suggestion.

Exercises 1. An enquiry by an American import company on July 10, 2002 Dear Sirs, We have seen your advertisement in China Daily, and would be grateful if you would kindly send us details of your small red beans. Please quote us for the supply of the items listed on the enclosed enquiry form, giving your price CIF Seattle. Will you please also indicate delivery times, your terms of payment, and details of discounts for regular purchases and large orders. We look forward to receiving your quotation.

Exercises 2. An offer by China exporting company on July 20, 2002 Dear Sirs, Re: small red beans We thank you for your letter of July 10, 2000. You asked us to make you offers for small red beans. We offer you 1500 metric tons at US$420 per metric ton, CIF Seattle, for delivery during December of 2000. The payment is confirmed irrevocable letter of credit in our favor, by drift at sight. This offer is firm, subject to your reply reaching us with in one week. We are looking forward to hearing from you, and assure you that your orders will receive our immediate attention.

Exercises A counter-offer by American importing company on July 25. Dear Sirs, We wish to thank you for your letter of July 20 offering us 1500 metric tons, US$ 420 per metric ton. CIF Seattle. In reply, we very much regret to state that your price too high and out of line with the prevailing market level. Information indicates that small red beans of England make have been sold at the level of US$ 400 per metric ton.

Exercises In such case, it is impossible for us to accept your price, as material of similar quality is easily obtainable at a much lower price. Should you be prepared to reduce your limit by, say US$ 400per metric tons. We might come to term. It is in view of our long-standing relationship that we make you a counter-offer. As the market is declining, we hope you will consider our counter-offer most favorable and telex us as soon as possible. We are anticipating your early reply.

Exercises 4. A new offer by China exporting company on Aug.3. Dear Sirs, We confirm your letter of July.25. Now we’ll a little change to your counter-offer in the price. The price is US$ 410 per metric ton small red beans, CIF Seattle. Is it OK? If you find it acceptable, let us have your reply as soon as possible. Yours faithfully,

Exercises 5. An acceptance by American importing company on Aug. 10 Dear Sirs, We are glad to know from your letter of Aug.3 that you have basically accepted our counter-offer dated July. 25 except change of the price. In reply, we confirm having sold to you 15000 metric tons of small red beans on the following terms and conditions:

Exercises Price: at US$ 410 per metric ton CIF Seattle Packing: in gunny bags of about 50 kilograms net each. Quality: FAQ 2000. Shipment: effected from Shanghai to Seattle during December 2000 Payment: a confirmed and irrevocable L/C in our favor, payable by draft at sight. We are pleased to have transacted this first business with you and look forward to the further expansion of trade to our mutual benefit.

Learning Objectives