Introduction to International Trade Documentation – Part 5

Transaction Documents

Transaction documents are generated by the buyer and seller to define their business relationship and provide an accounting record of individual transactions. These documents range from a simple letter of inquiry to a contract for the sale of goods and a commercial invoice.

Letter of Inquiry

This is a simple letter written by the buyer asking the seller if a product is available or if the seller will bid on the supply of a product. This letter is generally short and does not include detail specifications.

Request for Quotation

This is a letter written by the buyer asking the seller to submit a formal price quotation for a specified product and quantity.  A Request for Quotation is generally used for a one time sale of an existing product from the seller’s inventory or product line, or a fungible product.

Request for Proposal

This is a letter written by the buyer asking the seller to submit a formal proposal for a specified product and quantity. A Request for Proposal is generally used when envisioning an ongoing relationship with multiple deliveries over time or where a product has detailed specifications.

Proposal/Bid/Quotation/Offer

This is the seller’s written offer to sell specified products under specified terms and conditions. This can be as simple as a one page letter listing a stock number, quantities, price per unit and sales terms, or it can be a 100 pages proposal complete with engineering drawings, and complicated terms and conditions.

Pro-forma Invoice

This is a preliminary invoice made up by the exporter at the importer’s request prior to a shipment of merchandise. It identifies the parties to the transaction and includes the kinds and quantities of goods to be sent, their value and specifications and shipping costs. The pro-forma invoice is used by the importer to see what the purchase will cost, obtain any necessary import licenses and foreign exchange approval, and apply for a letter of credit.

Contract for the Sale of Goods (or Services)

This is the formal, legal agreement between the exporter and importer stating products and prices, responsibilities and rights, and terms and conditions.

Commercial Invoice

This is the prime transaction document. It lists the date, buyer and seller, products, quantities, prices, delivery terms and other important information.