Сorrespondence relating to prices

Dear Sirs,

We have received your letter of January 10th, this year, in which you ask us to grant you a discount of 25% off the price offered by us in our draft contract for the delivery of equipment and materials for the extension of the aluminium plant. In doing so, you refer to our Contract No____ for the delivery of equipment and materials for the construction of the first stage of the plant.

We regret to inform you, that we cannot meet your request because of the following reasons:

1. You consider that the prices of this kind of equipment have gone up by 20% since the time of signing our contract, i.e. for 6 years. According to the price indexes put out in the FRG, USA and UK, however, the average annual rise in prices of machines and equipment makes 8-10% i.e. 48-60% for 6 years, which corresponds to the 60% price rise accepted by us.

2. According to the published data, the production of one ton of aluminium requires investments equal to $.....

You certainly know that the cost of equipment make...% of the investments required for the construction of an aluminium plant.

This also proves that our price is reasonable.

Meanwhile we would like to draw your attention to the fact, that the equipment intended for delivery meets modern requirements and its level of automation is considerably higher than that of the equipment supplied before.

With this we are sending you our calculation of prices of the equipment and materials as well as information on the cost of construction of aluminium plants in different countries and ask you to consider the materials which, we are sure, will help you to accept our proposal.

We look forward to your reply.

Yours faithfully

 

Dear Sirs,

We thank you for the competitive materials handed over to us by your representative on May 20th, this year, in accordance with which you consider our price overestimated by 20%.

We cannot meet your request and reduce the price of the equipment and materials stated in our draft contract.

We believe that the price offered by us is at the level of prices stated in the materials handed over by you.

At the same time we should like to draw your attention to the following:

1. We believe that the terms of payment indicated by us are more advantageous that those of our competitors. In accordance with our draft contract we suggest payments by made on the basis of commercial credit to be granted for 8 years at a 5% annual interest rate, while our competitors offer you commercial credit for a shorter period of time and at a higher interest.

2. We undertake to deliver the equipment and materials within 30 months of the date of signing the contract. The delivery period under our competitors' offers is 40 months.

3. In addition, the volume of deliveries, according to the submitted competitive materials, does not include the equipment for the automatic control system of the production process.

In view of the above, we find our price quite reasonable. We should, however, be pleased to allow you a discount of 5% if you care, upon completion of construction of the first stage of the plant, to order from us equipment and materials for its further extension.

We hope you will see a real opportunity in our new proposal.

Faithfully yours

 

Уважаемые господа,

Мы внимательно рассмотрели Ваши замечания к проекту контракта на строительство электростанции в г... на условиях "под ключ".

Часть Ваших замечаний нами принимается. И в связи с этим нашему представителю дано указание внести в проект контракта соответствующие изменения.

С сожалением должны сообщить Вам, что мы не имеем возможности принять Ваши предложения по нижеуказанным пунктам:

1. Предлагаемые Вами 5% от стоимости контракта на мобилиза-ционные расходы в 4 раза меньше 20%, указанных нами в проекте контракта и не покрывают наши расходы по подготовке к строительству.

2. 7,5% от стоимости контракта в свободно конвертируемой валюте не позволяют нам закупить в третьих странах необходимое количество оборудования. 12%, указанные в проекте контракта, рассчитаны исходя из реальной потребности в таком оборудовании и учитывают только стоимость оборудования на базе мировых цен: стоимость фрахта, страхования и наши затраты по организации закупки и доставки оборудования на строительную площадку.

3. Единичные расценки стоимости рабочей силы и материалов, указанные в нашем проекте контракта, рассчитаны по официальным документам, полученных нами в Ваших государственных организациях и у потенциальных субподрядчиков – местных строительных фирм.

Учитывая вышеизложенное, мы просим Вас снять Ваши замечания по указанным пунктам и согласиться с нашими предложениями в проекте контракта.

В подтверждение нашей позиции направляем Вам дополнительные материалы по расчетам размеров мобилизационных расходов, а также копии предложений фирм и документов по единичным расчетам.

С уважением

Sirs,

Much to our regret we have to inform you that so far we have not received a bank guarantee from you.

In view of the above we would like to remind you of your letter of 20th May, this year, in which you asked us to change the method of payment by L/C as inconvenient owing to the difficulties and extra expences connected with its opening.

Understanding your difficulties, our objedinenije made you a concession and offered payment for collection terms. You accepted the proposed method of payment and undertook to submit within three weeks a first-class bank guarantee for 30% of the contract value.

Further we authorized our counsellor for economic affairs in your country to sign an addendum to our contract providing for the change in the original method of payment. The above addendum was signed on 15th June, this year.

After signing the addendum to the contract, our objedinenije instructed the manufacturing works to start shipping the spare parts to the port.

However, as we are still without your bank guarantee we have had to suspend the shippment of the above spare parts. At present more than 500 tons of spare parts are at the port and the expenses on their storage will be charged to your account.

We urge you to inform us immediately when the bank guarantee will be submitted and ask you to confirm your consent to cover the expenses on the storage of the spare parts kept at our port.

Yours faithfully

Dear Sirs,

In reply to your letter of 15th March, this year, in which you ask us to specify the terms of payment we are ready to inform you of the following:

1. All payments for the equipment to be delivered shall be made in pounds sterling in accordance with the Trade and Payments agreements in force between our countries, the sums due to us being remitted to the account of the Bank for Foreign Trade of the Russia with the Central Bank of your country in favour of our objedinenije.

2. Payments under the contract shall be made in the following way:

-advance payments of 25% of the contract value shall be paid within 30 days of the date of signing the contract;

-the remaining 75% shall be paid by five annual installments of 15% each, the first installment being paid within 12 months of the date of the bill of lading for the last consignment of the equipment.

At the date of the last shipment the Supplier will draw five drafts on the Customer. The drafts shall be accepted by the Customer within 5 days of the date of the receipt.

For using the credit the Customer will pay to the Supplier a 3.5% interest per annum. The amount of each draft will include the interest due on the maturity date of the draft.

We trust the information we have given you is sufficient to enable you to consider favourably the proposed terms of payment and we shall be able to discuss them in detail during our talks.

Yours faithfully

Уважаемые господа,

В соответствии с контрактом N_____ от 22 марта с.г. мы командировали в Вашу страну квалифицированных российских специалистов для оказания Вам помощи в составлении задания на проектирование горно-обогатительного комбината, сбора необходимых исходных данных и проведения геологических изысканий в районе строительства.

Оплата услуг специалистов должна проводиться Вами ежеквартально против наших счетов с приложением подробной калькуляции. Такой порядок платежей предусмотрен статьей 10 упомянутого контракта, в соответствии с которой мы выставили первый счет за услуги наших специалистов.

Однако наш счет был оплачен частично. Так, Вами не оплачена стоимость проезда и провоза багажа членов семей специалистов, а ставки возмещения исчислены Вами с момента прибытия специалистов в..., а не с момента пересечения границы. Вы уменьшили сумму счета без согласования с нами, что противоречит статье 25 контракта, предусматривающей консультации между сторонами по спорным вопросам и решение таких вопросов дружественным путем.

Направляя Вам настоящее письмо с приложением калькуляции, в которой нами отмечены неоплаченные Вами суммы, просим рассмотреть его в возможно короткое время и оплатить возникшую задолженность.

Одновременно мы вновь хотели бы отметить, что Вами до настоящего времени не выполнены условия контракта, предусматривающие предоставление российским специалистам бесплатного медицинского обслуживания. Кроме того, транспортные средства, которые Вы используете для доставки специалистов к месту работы, находятся в плохом состоянии, что является причиной частых опозданий специалистов на работу, а также вызывает серьезные опасения за безопасность их поездок. В связи с этим просим Вас принять самые действенные меры по решению этих вопросов.

С уважением

 

2.2. CORRESPONDENCE RELATING TO GUARANTEES AND
ELIMINATION OF DEFECTS

Dear Sirs,

We have received your letter of 20th December, this year, and are puzzled by your decision to prolong for only one month the guarantee period for the generator which broke down owing to manufacturing defects.

In view of this we would like to draw your attention to Clause 7 of our contract providing for the prolongation of the guarantee period, if the equipment breaks down owing to the defects of the manufacturing plant for the period during which the equipment stood idle.

You certainly know that we duly informed you about the breakdown of the generator. Your representatives, however, arrived at the plant after a big delay as a result of which the generator was put into operation only two months after its breakdown.

Moreover we are surprised at your refusal to compensate us fully for the losses caused by the idle time of the generator.

Under our contract the Customer has the right to make a claim if the equipment fails due to the above reasons.

Talking into account the above, we would like to resume our talks and to finalize the date of the expiration of the guarantee period and to solve the matter of full compensation of our losses.

Yours faithfully

 

Dear Sirs,

We have received your letter in which you inform us about the breakdown of the generator and request us to eliminate immediately the defects which caused this failure.

In this connection we would like to remind you that under our contract signed on a "turn-key" basis, the operation of the station during the guarantee period is carried out by the Customer's personnel who are responsible for the strict observance of the operation instructions.

The representative of the manufacturing works who immediately arrived at the plant, informed us that he had examined the generator in the presence of the representative of the Engineer and had come to the conclusion that the generator failed because your personnel had seriously infringed the operation instructions.

As the damage to the generator is serious, the representative of the manufacturing works finds it advisable to replace some of its parts.

Under the circumstances we suggest arranging talks without delay so that we could discuss the delivery of additional parts for the generator, their erection and adjustment.

 

Truly yours