Negotiating and Building a Term Sheet: Partner A – Executive of Coastal Coffee Corporation, Partner

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ASSIGNMENT TEMPLATE Date: Names of both Partners: Roles: Partner A – Executive of Coastal Coffee Corporation:________________________________ Partner B – Executive of Canada Coffee Roasters Corp.: _________________________________ PART A – Term Sheet (20 marks) DETAILS of how the term will Name of CONTRACT operate in the contract (use TERM or CLAUSE simple English as you would want it reflected in the contract) (1 mark) 1. Pre-Paying Option Canada Coffee Roasters Corp should have an option to pay for the future orders.

2. Contract Length

This term sheet stays valid for 1 year, post which performance review would be done.

3. Payment Terms

Coastal Coffee would require 30% perfect payment of shipment at the time of the shipment date and rest within 30 days from delivery date The products should be responsibly sourced and should practice fair trade in employment and law environmental laws Coastal Coffee agrees to sell raw cocoa beans @US$ 28.5/KG

4. Environmental Friendliness

5. Price

6. Size Specifications

Partner A needs to deliver the products in 4kgs bags.

REASONS why the term is important to include (1 mark)

Its important for Canada Coffee Roasters as the payments are directly related to international foreign exchange Canada Coffee Roasters would have a year to assess their supplier based on several factors and decide whether to review the contract or find another supplier.

As this would act as a surety for Coastal Coffee and keep their accounts receivables coming.

Canada Coffee Roasters would be assessing the sustainability practice of their vendor to keep adhere to Sustainable Development Goals.

As high volume of raw materials would be required for Canada Coffee Roasters Corp. there will be a volumetric discount on the price.

This would be helpful for Partner B to ensure the quality parameter is

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7. Contract Limitations

8. Resolution of Disputes

9. Potential Penalty

10. Product Age

If any violations found by any of the parties and if the resolution of the issues cannot be reached, then the contract can be terminated in favor of the victim party.

Escalation procedures include involving of business heads or even corporate heads of either parties to ensure the resolution is reached. If still the resolution is not certain, mediation method should be used before going with litigations.

Price penalty, in case there are breach in contract terms or vendor, or supplier is not able to satisfy any terms.

Each shipment should be fresh enough to keep in inventory for 1 year at the buyer’s end.

met.

It is important to set such terms while dealing in international trade, as the issues tends to arise in long distance shipments.

Again an important aspects of contract while practicing international trade.

It holds important role as it will help both the parties to stay up to the expectations and each other’s expectation.

Freshness is important as the Partner B won’t be processing the entire batch at once, in fact it would be based on the production planning.

PART B – Reflection (5 marks) Each partner must answer the following questions (in 100-200 words per item): Partner A – Executive of Coastal Coffee Corporation: ________________________________ 1. What terms of the contract were critical for you that were different from the other side or difficult to agree on and why?

Payment Terms: Its important as supplier company to have some payment received from the buyer as payments it feeds into operations and helps in paying the expenses. If that was not the case, then the payment would delay a lot as the shipment delivery duration is high in this case. However, Canada Coffee Roasters Corp. initially objected in giving the advance payment of 30%, however, in further negotiations it was accepted.

2. What are the key takeaways (lessons) for your next contract negotiation (in real life)? Refer to examples from this negotiation in your answer.

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Negotiations are one of the most important skills and ability that an individual might use in their life personally and professionally. Its is, however, something that lot of people might not know to structure a negotiation. This exercise has also given me an understanding of how negotiation works, for example in previous answer its because of effective and reasonable negotiation that led to a conclusion that was in Partner A’s favor.

Partner B – Executive of Canada Coffee Roasters Corp:________________________________ 1. What terms of the contract were critical for you that were different from the other side or difficult to agree on and why?

Price: It was difficult to negotiate the price down or get the discount from the supplier as the vendor is already selling the products to international buyers for USD 30/kg. However further negotiations and deciding on the minimum order quality helped in reducing the price to USD 28.5/Kg. The supplier was shown the benefit of the volume of order we would be doing.

2. What are the key takeaways (lessons) for your next contract negotiation (in real life)? Refer to examples from this negotiation in your answer.

As soon my next negotiation would be probably in a corporate setting or while getting into one. This assignment has given the fair understanding on how we produce facts to favor your say in negotiations. For example, when the vendor was offered a price of 27 USD in initial stages of negotiating the term sheet, they straightly declined and requested to raise the offer price. In the next stage the vendor was shown the volume of orders we would be doing and the overall benefit they might get from this is tremendous. Hence a factual data has helped in deciding a favorable term.

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