What is an ICPO (Irrevocable Confirmed Purchase Order)?

What is an ICPO

Simply put, ICPO is a document similar to a letter of intent (LOI) used by companies to communicate their intent to enter into a transaction with a foreign-based company and provide verification of purchasing terms, banking information, and company financials.

What an ICPO does ?

It will show the willingness of a buyer to confirm a purchase of a product with a seller. This document tells the seller that the buyer is willing to get into the purchase of noted product with the outlined procedures and given information.

The structure of ICPO

The Irrevocable Confirmed Purchase Order or ICPO consists of different important parts that shows the overall and sometimes detailed aspects of the purchase.

The important parts are:

  • Introduction of the buyer and their willingness verbiage.
  • The commodity or service in subject.
  • Transaction Procedure.
  • Specifications and detailed information of the commodity.
  • Buyer’s information.
  • Buyer’s bank details.

 

Let’s go through each section and provide an example of the content of each part.

Part 1: Introduction of the buyer and their willingness verbiage

The first part goes simply by telling who is the buyer and what are their responsibility, you may see it as:

We, OOO “Savand Bros” located at Russian Federation, Moscow, hereby state and represent that it is our corporate intention to purchase the commodity “Diesel Gas D2 GOST 305-82”, and for the price and quantity as specified in the terms and conditions stated below. This representation is made with full corporate authority and responsibility.

Part 2: The commodity or service in subject

The next part usually is an summary of the purchase and its overall request.

In the example provided, we assume the buyer has issued the ICPO for purchase of Russian Diesel Gas D2 GOST 305-82 in the Quantity of 50,000 MT per month to be delivered to port of UAE, Fujairah in the terms of CIF with Inspection of SGS, CIQ, one year of supply.

CommodityDiesel Gas D2 GOST 305-82
OriginRussian Federation
SpecificationsExport Standard Quality as attached
Quantity50,000 MT
Contract LengthSPOT + 12 Months contract with rolls and extension
Target PriceUSD $ 330 Gross/ $ 320 Net
Delivery PortCIF Fujaireh Port
InspectionSGS, CIQ
PaymentAccording to the procedure

 

Part 3: Transaction Procedure

In this section, buyer will fill out the transaction procedure exactly as seen in the SCO (Soft Corporate Offer) received from the seller. Although it depends on how strict the procedure of the seller is, the buyer may include the prefered to modified procedure as well.

However, this place is very important to be outlined since on the time of contract this is what matter and seller will issue SPA based on the given procedure.

 

Transaction Procedures

  1. Buyer issues ICPO with letter of acceptance to seller upon receipt of soft corporate offer.
  2. Seller issues Sales and Purchase Agreement open for amendment for Buyer review
  3. Buyer review Draft Contract Agreement, signs and returns copy to Seller
  4. Seller reviews the Buyers signed contract, acknowledged and send Title of Ownership Transfer Form to Buyer. Buyer files, signs and returns for final execution
  5. …..

Part 4: Specifications and detailed information of the commodity

For a more formal and exact specification of commodity that buyer is seeking to purchase from the buyer is much better to have the detailed information of the commodity. In this case, both parties know what they’re dealing with and there will be less wasted time and prevents paperwork and confusions.

russian d2 specification page sample in icpo
Specification page of the commodity in an ICPO letter.

 

Part 5: Buyer’s information

Seller needs to know who has issued such letter and entered the agreement, therefore buyer needs to fill such information.

Name: John Doe
Designation: Manager
Company Name: OOO, “Savand Bros”
Address: The legal address of the office.
Tel.: +7 984 215 9855
Mobile: +7 984 215 4023
Email Address: hello@savandbros.com
Passport No: N845235165
Nationality: Japan
Passport Copy: [AN IMAGE of FIRST PAGE of PASSPORT]

 

Part 6: Buyer’s bank details

The draft of SPA (Sales & Purchase Agreement) will use all these info and exactly the banking information provided in this section. The banking details in this section will be used the financial transaction in the contract.

Buyer’s Bank Details

 

BENEFICIARY NAME:OOO “Savand Bros”
BANK NAME:Citi Bank
BANK ACCOUNT NAME:OOO “Savand Bros”
BANK ADDRESS:Citi Bank, Red Square Branch
IBAN:1851 1215 8415 8515 15125
SWIFT:CTRSMS
BANK OFFICER:Mr Big Mac
BANK OFFICER EMAIL:big.mac@citi.bank
BANK TEL.:+7 981 845 2125
BANK FAX:+7 981 845 2126

That’s pretty much what it should be inside a ICPO and how it should be filled.

One more thing

When issuing the ICPO letter, always remember to have it on your company head letter and stamp and sign it at the end.

Free ICPO template

You can download a free ICPO template and use it via the link below:

IRREVOCABLE CORPORATE PURCHASE ORDER (ICPO) Blank Template

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