Because descriptions provide a minimum of detail
concerning quality they are seldom if ever used for the trade in high quality
coffee. In addition, buyers know that different sellers have their own
interpretation of FAQ and so prefer to deal with shippers whose interpretation
is acceptable to them. However, a trader wishing to short-sell XYZ arabica grade
one FAQ forward does not necessarily know in advance which shipper or exporter
he will later buy from.
In this case the term first class shipper can be added
to the description, thereby implying that a reputable exporter will ship the
coffee. But the term first class is open to interpretation as well and so the
contract may instead stipulate the names of exporters of whom the buyer
approves, one of whom must eventually ship the coffee. Large roasters are quite
flexible about the origin of standard or commercial grade coffee, and to widen
their purchasing options often leave the seller free to deliver an agreed
quality from one of a number of specified origins and shippers.
Subject to approval of sample (SAS):This is
one way to eliminate most of the quality risk inherent in buying unseen coffee
from unknown shippers, as buyers are not obliged to accept any shipment that
they have not first approved. SAS obliges the exporter to provide an approval
sample before shipment. There are three generally recognized possibilities.
SAS, no approval no sale. If the sample is not
approved the contract is automatically cancelled.
SAS, repeat basis. If the first sample is
rejected, a second or even a third sample may be sent. Sometimes the contract
will mention how many subsequent samples can be submitted. This option provides
maximum quality security without immediately jeopardizing the contract, and
works well in long-standing relationships.
SAS, two or three
samples for buyer's choice. When the buyer's quality requirements are
very specific, and in order to save time, multiple samples may be submitted at
the same time. To avoid confusion such contracts should stipulate whether repeat
samples may be sent or whether no approval means no sale.
Theoretically, an exporter
who feels aggrieved by what seems to be an unreasonable (intentional) rejection
and cancellation could declare a dispute and proceed to arbitration (See 07).
The chance of success
would however be extremely slim if not non-existent, not least because an
arbitration panel might rule it has no jurisdiction over what was in essence a
purely conditional contract that never became binding (because the buyer did not
approve a sample). Exporters should therefore be fairly selective when agreeing
to sell subject to approval of sample.
Stock-lot
sample: Selling on stock-lot sample avoids potential approval problems.
The sample represents a parcel that is already in stock so there should be no
discrepancy between the sample and the shipment, including the screen size (even
if the screen size was not stipulated). Day-to-day business would become too
cumbersome if one insisted on stock-lot samples for all deals, but for newly
established exporters or for those wishing to break into a niche market or to
trade top quality coffees, stock-lots usually are the best route.
Once a satisfactory
delivery has been made, an exporter may wish to sell a similar quality again.
Rather than send new samples, the exporter may offer quality equal to stock-lot
X; this guarantees that the coffee is of comparable quality, suitable for the
same end-use as the original purchase. The words equal to must be used because
the sample was not drawn from the new lot of coffee. If the exporter feels that
the quality is very similar but that a little latitude is needed as to the
coffees bean size or green appearance, they may say quality about equal to
stock-lot X. Usually, such business is only between parties in a long-standing
relationship who know each other well.
Type: Once a
few transactions have been satisfactorily concluded, buyer and seller may decide
to make the quality in question into a type. Both parties are now confident that
the quality will be respected and business can proceed without samples (although
some roasters will still insist on pre-shipment samples). Usually the quality of
a type (like a recipe) is kept confidential between shipper and buyer. Top or
exemplary coffees are mostly sold on sample or type basis whereas medium and
standard qualities are more often traded on description.