Trade terminology
How these terms work in a commodity file: what they cover, what they do not, and where they sit in RFQ, verification and documentation.
These notes are practical explanations for buyers and suppliers. They are not legal advice and they do not replace the Incoterms rules, UCP, or the contract written for a given trade.
- RFQRequest for quotation
An RFQ (request for quotation) is a buyer’s written inquiry asking a seller to price a defined commodity parcel.
- KYCKnow your customer
KYC (know your customer, often used as know your counterparty) is the file that establishes who a company is before names are introduced or terms are negotiated.
- UBOUltimate beneficial owner
A UBO (ultimate beneficial owner) is the natural person who ultimately owns or controls a company, behind any holding companies, nominees or trading names.
- HS codeHarmonized System code
An HS code (Harmonized System code) is the international tariff classification of a good.
- IncotermsIncoterms 2020
Incoterms are standard trade terms published by the International Chamber of Commerce (ICC).
- FOBFree on Board
FOB (Free on Board) is an Incoterms rule for sea and inland waterway transport.
- CFRCost and Freight
CFR (Cost and Freight) is an Incoterms rule for sea and inland waterway transport.
- CIFCost, Insurance and Freight
CIF (Cost, Insurance and Freight) is an Incoterms rule for sea and inland waterway transport.
- COACertificate of analysis
A COA (certificate of analysis) is a laboratory document that reports test results for a defined lot against a specification: purity, moisture, melt flow, nutrient content, or whatever the contract named.
- Third-party inspectionPre-shipment inspection
Third-party inspection is a visit and a report by a surveyor named in the contract, or agreed by both sides.
- Sanctions screeningRestricted-party screening
Sanctions screening is a check of goods, producers and counterparties against applicable sanctions and export-control lists and rules.
- Letter of creditLC
A letter of credit (LC, documentary credit) is a bank’s undertaking to pay against stipulated documents, not against the goods themselves.
- Certificate of originCOO
A certificate of origin is a document that states the country of origin of the goods, issued in the form the destination or a preference scheme requires.
- Bill of ladingB/L
A bill of lading is the ocean (or multimodal, in some forms) transport document that typically acts as a receipt for the goods, evidence of the contract of carriage, and, when issued to order and negotiable, a document of title.
- Commercial invoice
A commercial invoice is the seller’s bill for the goods: parties, description, quantity, price, currency, Incoterm and payment terms as contracted.
- Packing list
A packing list itemises how the goods are packed: bags, drums, bundles, container numbers, marks, net and gross weights, and sometimes batch numbers.
If you have a specification, send the RFQ.
A complete inquiry can be reviewed and quoted. There is no public price list and submitting an RFQ does not create an obligation.