unit7

Unit 7 Offers and Counteroffers

【Unit objectives】

Upon completing this unit, you will be able to write offers and counter-offers

effectively. To achieve this goal, you should be able to

1) Understand the nature of offers and counter-offers.

2) Write clear, well-organized offers.

3) Compose indirect and friendly counter-offers.

【Background information】

An offer is a declaration that the seller or the buyer is willing to sell or buy a

certain amount of specified goods, at specified prices, under specified terms. An offer

becomes legally binding on the parties involved upon its acceptance.

An offer must satisfy four requirements to make it legally effective: 1) The

offeree must be specified. An offer without a specified offeree can only be taken as an

invitation to make an offer. 2) The offeror must show his intention to conclude a

contract and abide by the contract. 3) The offer must be definite. The offer must

definitely state, without any reserve, the necessary conditions of the sale. Generally,

an offer should cover six conditions for the sale, i.e. quality, quantity, package, price,

delivery, and payment. 4) The offer must reach the offeree.

An offer must not contain any vague words. Words such as “about”, “roughly”,

“approximately”, or “for reference” should not be used in an offer.

In addition, an offer must be final. To be final means the offeror must not have

any reserve. Offers with phrases such as “subject to our final confirmation”, “subject

to prior sale”, or “without engagement” can only be regarded as an offer without

engagement or can be revoked even after it has been accepted by the offeree.

An offer should clearly state a time for which it is valid. An offer terminates

when the period of validity expires, or the offeror has received a refusal or

counter-offer from the offeree, or the offeror has effectively withdrawn the offer.

A firm offer is a promise to sell or buy the goods at a stated price within a stated

period of time. A firm offer cannot be withdrawn by the offeror within its validity. It is

the offeree’s option to accept or reject or counter-offer within its validity. Once the

firm offer is accepted, it becomes a contractual obligation.

A counter-offer is an amendment to part or all of the terms of an offer. Once the

counter-offer has been made, the offer would cease to be valid, and this counter-offer

would become a new offer. A counter-offer is actually a rejection of an offer – a

bad-news message.

【Tips for writing effective offers】 ★ An offer should be clear, definite, complete and final.

★ If an offer is sent as an answer to an enquiry, begin the offer with an expression of

thanks for the enquiry.

★ State directly and clearly the necessary conditions of the sale, including detailed

description of the goods, quantity, price terms (covering currency code, unit price,

measurement unit, commission, discount and trade term, e.g. FOB, or CFR or

CIF), package, terms of payment and delivery.

★ Give a definite period of time for which the offer is valid.

★ Include necessary explanation wherever it fits.

★ End with an expression of hope that the offer will be accepted.

【Tips for writing effective counter-offers】

★ Begin a counter-offer by thanking for the offer.

★ Before making a specific counter-offer, present a concise explanation showing the

fairness of a counter-offer to prepare the reader to receive the bad news in the

most favorable possible.

★ Make a clear, reasonable and courteous counter-offer in a positive way.

★ End with goodwill.

【Sample letters】

Letter 1 A firm offer

Dear Sirs

Men’s Shirts

We thank you for your enquiry of October 10 for the captioned goods.

We are making you our favorable offer for 5,000 dozen of Men’s Shirts at USD12.60

net per piece CFR Rotterdam for March/April shipment of 2009, subject to your reply

reaching us by February 5, our time.

There has been a growing demand for our Men’s Shirts, which may result in increased

prices. However, you may get 2% discount if you send us your immediate acceptance.

We look forward to your early reply.

Yours faithfully

Letter 2 An offer without engagement

Dear Mr. Smith,

Re: “White Rabbit” Woolen Blanket

We thank you for your enquiry of April 8 for woolen blankets.

For the quantities you need, we offer you as follows, subject to our final confirmation:

Commodity: “White Rabbit” Brand Woolen Blanket, Art. No. 45.

Size: 72X84 in. (182X213 cm)

Color: Yellow

Quantity: 2400 pieces

Packing: Each piece in a poly bag, 20 pieces in a carton

Price: US$45.00 each piece CIF London

Shipment: During September/October.

Payment: By 100% confirmed, irrevocable letter of credit in our favor payable by