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  • 3.2-COTTON MARKETING-SCOPE AND VALIDITY OF AN OFFER OR BID

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  • Scope and validity of an offer or bid

    Chapter 3 - Cotton marketing - Scope and validity of an offer or bid 

     
     

    An exporter wishing only to advertise a potential availability at an approximate price uses terminology such as price idea or we offer quote subject to availability or subject unsold. To the buyer this suggests there is a good chance of purchasing the cotton in question if the indicated price is agredd to. Although the exporter is not bound to sell, the buyer has some reason to be annoyed if the exporter refuses to do so for no obvious reason (e.g. was simply fishing for price information).

    With a firm offer, however, the seller is committed to sell, if the buyer accepts the offer, within the validity timeframe of the offer. Sellers must stipulate a time after which the offer lapses. The same applies to bids from buyers: these too must be specific. Subject to immediate reply says that the reply should be immediate, but even immediate is not precise. It is always better to say, for example, subject to reply here by 3 p.m. our time. The choice of time limit depends on the situation of the exporter and the type of buyer to whom the offer is addressed. Exporters who are keen to sell may wish to try various markets at the same time. If they have only limited stocks of the cotton in question they cannot make multiple firm offers and will instead offer subject to availability or subject unsold. Alternatively, they can make firm offers for short periods to individual buyers by telephone or, increasingly, by e-mail. Conversely, they can give a buyer or, more probably, an agent an entire day to work an offer, but the exact time at which the offer expires should always be stated.

    Modern communications offer almost instantaneous exchanges, especially through e-mail and electronic commerce, enabling exporters to contact many potential buyers within short periods of time. It is not only the face of trade that is changing, but also the methodology and terminology. What will not change is that acceptance, verbal or otherwise, within the time limit of a firm offer or bid constitutes a firm and binding contract. Disputes can be submitted to arbitration but the best approach is to ensure that the wording of offers or bids is clear and precise.

    If a buyer counter bids a lower price against a firm offer this automatically releases the seller. The offer is no longer binding, because the buyer has rejected it by counter offering. If the seller rejects the counter offer the buyer cannot subsequently revert to the original offer - when they countered, that firm offer lapsed - unless, of course, the seller agrees to reinstate it.