Unit Four Offers and Counter-offers

Learning Objectives To understand conditions than an offer and counter-offer shall possess. To understand conditions of acceptance To learn usual steps for making an offer and a counter-offer

1. Offers An offer is a reply made by a seller to the enquiry by a buyer. It has also been the practice that a seller voluntarily makes an offer to his regular customers or new customers who may have interests in his products without waiting for an enquiry. In practical international business, there are two kinds of offers: firm offer non-firm offer

A firm offer is a proposal for concluding a contract on the terms and conditions stated. Firm offers are made when a seller promises to sell goods at a stated price and within a stated period of time. Usually it is made by a seller upon receipt of an enquiry from a buyer. When a buyer initiates an offer to a seller, it is called a bid. An offer creates a power of acceptance permitting the offeree by accepting the offer, to transform the offeror’s promise into a contractual obligation. Thus, once it has been accepted it cannot be withdrawn.

A firm offer will include the following: a. An expression of thanks for the enquiry, if any; b. Name of commodities, quality, quantity, and specifications; c. Details of prices, terms of payment, commissions, or discounts, if any; d. Packing and date of delivery; e. The validity of the offer; f. An expression of hope that the offer will be accepted. (optional)

2.Counter-offers  When an offeree does not agree to the terms and conditions of the offer completely and he wants to amend the offer, a counter offer can be made.  A counter offer is virtually a partial rejection of the original offer and also a counter proposal initiated by the offeree.  The offeree may show disagreement to the price, or packing, shipment and state his own terms instead.  Such alterations, no matter how slightly they may appear to be, signify that business has to be negotiated on a renewed basis.

 The original offerer or the seller now becomes the offeree and he has the full right of acceptance or refusal. In the latter case, he may make another counter offer of his own.  This process can go on for many a round till business is finalized or called off.  When an offeree rejects an offer, he should write to thank the offerer and explain the reason for the rejection. Not to do so would show a lack of courtesy.

Guidelines for Writing 1. A letter of offer or quotation A letter of offer or quotation is usually composed of the following three parts: (1). An expression of thanks for the enquiry, if any; (2). Details of the goods, prices, discounts or commissions, terms of payment, the time of delivery, the time period in which the offer is valid; (3). An expression of the offer will be accepted.

2. A letter of counter-offer A letter of counter-offer is to be written, which should include: 1. An expression of thanks for the offer; 2. Reason for inability to accept the offer; 3. A counter-offer （ your own idea including terms and conditions acceptable, etc. ） ; 4. A wish of the counter-offer will be accepted (urging the reader to accept early); 5. A wish of other business opportunities in future if necessary.

3. A letter of re-counter offer A letter of re-counter offer, which should cover the following particulars: 1. An expression of thanks for a counter offer; 2. Stating what shall be amended; 3. A wish of a favorable reply.

Specimen Letter-1 (An Offer based on Enquiry) SHENZHEN NEW CENTURY TRADING CO., LTD Rm 818, 3 Building Ease, SEG Science & Technology Park Huajiang North Road, Shenzhen, China Tel: September 30, 2007 The NILE TRADEING CO., LTD 161 Pyramid Street Alexandria.Egypt Dear Sirs, Replying to your enquiry of May 13 for a supply of our crockery, we are pleased to quote as follows: Teacups ＄ 56 per hundred Tea Plates ＄ 40 per hundred Teapot, 1-litre ＄ 3 each

These prices include packing and delivery, but crates are charged for, with an allowance for their return in good condition. We can deliver from stock and will allow you a discount of 5%, but only on terms ordered in quantities of 500 or more. In addition, there would be a cash discount of 2% on total cost if payment were made within two months from date of invoice. We hope you will find these terms satisfactory and look forward to the pleasure of your order. Yours faithfully, Yao Da-ming

Specimen Letter-2 （ Non-firm Offer ） Green Plants Co., Ltd. Rm Kai Tak Comm. Centre, 317 Des Voeux Road, Central Hong Kong Tel: August2008 Foods Industrial Company Shireroad London, UK Dear Sirs, In reply to your letter of May 5, we have pleasure in offering, subject to our final confirmation. Our main products are as follows:

Commodity: Green Beans Guangdong Origin, 2007 crop Quantity: 300 metric tons Price: USD930 per metric ton CIF London Packing: in ordinary second-hand gunny bags Shipment: in August, 2008 Payment: by irrevocable L/C, payable by draft at sight. We hope this offer will be of interest to you, and look forward to hearing from you soon. Yours faithfully, Rob Kennedy

Specimen Letter-3 (A Firm Offer for Plush Bear) March 5, 2008 Dear Mrs. Celia Clemens, Re: Plush Bear Item No. 1003P We thank you for your of March4, 2008, enquiring for the captioned goods. As requested, we offer firm, subject to your reply reaching here by March18, as follows: Plush Bear Item No. 1003P as per sample, each in a plastic bag and then in a box, 30 boxes to a carton with white and brown equally assorted.

Unit Price: USD10.59 per dozen, CIF Singapore Payment: by Irrevocable Letter of Credit Quantity: Minimum order 500 dozen, maximum present capacity 1,000 dozen a month. Delivery: within 30days after receipt of the relative L/C. We hope the above will be acceptable to you and await your early order. Yours faithfully, Paul Zhou

Specimen Letter-4 (A Counter-offer for Plush Bear) 8 March 2008 Dear Mr. Zhou, Re: Plush Bear Item No. 1003P We’ve received your offer of 5th March for Plush Bear Item No. 1003P with thanks. All the terms contained in the offer are acceptable except the price. While appreciating the quality of your commodity, we find your price on the high side. Now in Europe, many suppliers, mainly from Asia, have come into the market with a much lower price than yours. The chief sellers, worrying about their

market share, are again lowering their prices. Such being the case, to accept your quotation would mean little profit to us. However, we would like to place a trial order with you if you could make a 8% reduction in your price. Should this transaction prove to be successful, we’d certainly place more substantial orders on a regular basis. We hope you will reconsider this matter and send us a new offer. Yours sincerely, Mrs. Celia Clemens

Specimen Letter-5 (Exporter’s Reply to a Counter-offer) March 13, 2008 Dear Mrs. Celia Clemens ， Re: Plush Bear Item No. 1003P Thank you for your fax of March 13. We are indeed sorry that you found our price too high. Actually the prices we quoted you are narrowly calculated and are very realistic. As I am sure you know, we operate in a highly competitive market in which we have been forced to cut our prices to the minimum. If it were not for the regular orders we received from a number of our customers, we could

not have quoted such low prices. We believe a fair comparison of quality between our products and those from other sources will convince you of the reasonableness of our quotation. However, in view of our future cooperation, we would exceptionally give you a 3% quantity discount if you order exceeds 8,000 dozen. We hope you will accept our proposal and look forward to your trial order. Yours sincerely, Paul Zhou

Specimen Letter-6 （ A firm offer for Velvet ） July 30, 2007 Dear Sirs, Re: Velvet We are very pleased to receive your enquiry of July 28 and confirm our Fax of this morning, as follows: “Fifty-five pounds per thirty-six yard piece F.O.B Liverpool subject to your replying here within one week”. We must stress that this offer is firm for one week only because of the heavy demand for the limited supply of velvet in stock.

The material is of the finest quality and we can assure you that so far as quality goes you have nothing at all to fear from the similar materials of other manufacturers either in this country or abroad. We feel sure you will realize that our quoted price is very reasonable, but we are anxious to do what we can to help you to establish your new business and are prepared to allow you a discount of 1%. If you decide to take advantage of our offer, kindly confirm your acceptance. Yours faithfully, Tony Liu

Specimen Letter-7 （ A Counter-offer for Velvet ） August 10, 2007 Dear Sirs, Re: Velvet We have received your offer dated July 30 for the captioned goods. Though we appreciate the quality, the offers we have received from other suppliers are much lower than yours. We like the quality of your goods and also the way in which you have handled our enquiry and would

welcome the opportunity to do business with you. May we suggest that you could perhaps make a 5% allowance on your quoted price that would help to introduce your goods to our customers? If you cannot do so, we’ll have no alternative but turn to other suppliers. We hope you will consider our counter-proposal and look forward to a more favorable offer. Yours faithfully, Black Smith

Specimen Letter-8 （ Reply to a Counter-offer ) August 17, 2007 Dear Sirs, Re: Velvet We are sorry to learn from your letter of August 10 that you find our prices too high. We do our best to keep price as low as possible without sacrificing quality and to this end are constantly enquiring into new methods of manufacture. Considering the quality of the goods offer we do not feel that the price we quoted are at all excessive,

but bearing in mind the special character your trade, we have decided to offer you special discount of 5% on a first order for ￡ We make this allowance because we should like to do business with you if possible, but we must stress that it is the further we can go to help you. At least we hope the revised offer will now enable you to place an order. Yours faithfully, Tony Liu