Commodity trading has a vocabulary problem. Half of it is legitimate trade-finance terminology, half of it gets weaponized by people hoping you're too embarrassed to ask what it means. This page is the short version of every term — with a link through to the long version if you want it.
Deal-stage terms
LOI — Letter of Intent. Signals serious interest and outlines broad terms. Generally not legally binding on price or delivery — it's the starting gun for due diligence, not the finish line. Full explainer →
SPA — Sales & Purchase Agreement. The actual binding contract: specific quantity, price, incoterms, payment terms, and penalties for non-performance. This is where real obligations start. LOI vs SPA, explained →
POF — Proof of Funds. Documentation showing a buyer genuinely has the funds available, verified bank-to-bank before a seller commits time or product to a deal. Table stakes, not a guarantee of legitimacy on its own. Full explainer →
Confidentiality and introduction terms
NDA — Non-Disclosure Agreement. Standard confidentiality: don't share what you learn.
NCNDA — Non-Circumvention, Non-Disclosure Agreement. Everything an NDA does, plus protection against cutting out whoever made the introduction. This is what makes multi-intermediary deal chains function at all. NCNDA vs NDA, explained →
IMFPA — Irrevocable Master Fee Protection Agreement. Locks in commission splits across a chain of intermediaries before funds move, so nobody's relying on a verbal understanding from three months ago. Often signed alongside an NCNDA.
Payment and settlement terms
SBLC — Standby Letter of Credit. A bank's promise to pay if the applicant fails to fulfill a contractual obligation — a real, legitimate trade-finance instrument. Also the favorite prop of a very specific kind of fraud ("leased SBLC" offers). What is an SBLC, and why is it abused →
Escrow. A neutral party holds funds and releases them only when agreed conditions are met — nobody pays before goods move, nobody gets goods before payment is secured. Traditional bank escrow, milestone-based escrow, and on-chain escrow all do this differently. Escrow 101 →
Logistics terms
FOB — Free On Board. Seller's responsibility ends once goods are loaded onto the vessel. Buyer takes on shipping cost, insurance, and risk from that point.
CFR — Cost and Freight. Seller pays freight to the destination port; risk still transfers at loading. Buyer arranges their own insurance.
CIF — Cost, Insurance, Freight. Like CFR, but the seller also arranges (minimum) insurance for the voyage. FOB vs CIF vs CFR, explained →
People and roles
Broker. Introduces buyer and seller, earns commission on a successful close. Not authorized to bind either party to terms.
Mandate. Formally authorized, in writing, to represent a buyer's or seller's interests directly — a meaningfully higher level of trust and authority than a broker.
Sub-broker. A broker introduced by another broker. Completely normal when disclosed and documented; a dispute generator when nobody can explain the chain after the deal closes. How commission structures actually work →
Bookmark this one. Every other post on this blog assumes you already know what's on this page — now you do.