FCO vs SCO: Full vs Soft Corporate Offer in Commodity Trade
The exact difference between a Full Corporate Offer and a Soft Corporate Offer, when to move from SCO to FCO, and the compliance clauses no buyer should accept a deal without.
In physical commodity trade, the sequence of offer documents matters as much as the price. A Soft Corporate Offer opens the conversation; a Full Corporate Offer closes it. Confusing the two - accepting an SCO as if it were binding, or insisting on an FCO before a chain of intermediaries has NCNDA protection - stalls deals. This guide explains the distinction and the clauses that separate a serious offer from marketing paper.
Soft Corporate Offer (SCO)
An SCO is a non-binding indication: "we can typically supply 20,000 MT/month of X grade at approximately Y USD/MT, subject to product availability, buyer credit approval and prevailing market conditions." Its purpose is to open dialogue and get counterparties to sign an NCNDA before commercial terms are exchanged in detail.
A well-drafted SCO includes the product family, an approximate specification, target monthly and annual volumes, indicative price basis, and the seller's contact details. It should not include a firm delivery date, a fixed price, or any language that could be construed as a firm offer under CISG or local contract law.
Full Corporate Offer (FCO)
An FCO is a signed, dated, addressed firm offer with a validity window. It is issued after the buyer has responded to the SCO with an ICPO and after all intermediaries have signed an NCNDA. On acceptance during the validity period, the FCO becomes binding without further signature - which is why the seller should only issue one when product allocation, pricing hedge and logistics slot are all secured.
The seven clauses every FCO needs
- Product specification - grade, quality parameters, ASTM/ISO reference, permitted deviation range.
- Quantity - per shipment (with tolerance, e.g. ±5 percent) and total contract volume.
- Incoterms 2020 rule - three-letter rule with the named place; e.g. "CIF Rotterdam, Incoterms 2020".
- Price - fixed number or a formula indexed to a benchmark (Platts, Argus, LME) with the exact calculation basis.
- Payment terms - LC type (sight or usance), tenor, acceptable issuing bank, confirmation requirement.
- Delivery schedule - first shipment date and subsequent monthly quantities.
- Compliance clauses - sanctions carve-outs, EUDR / CBAM data provision, force majeure, dispute jurisdiction and governing law.
Red flags on either document
- No signature or company letterhead - the offer is not from a corporate entity.
- Prices dramatically below market - almost always a fraud vehicle. Cross-check against Platts or LME.
- Unusual payment structure - upfront wire, MT760 without an underlying LC, or SBLC issued by an unknown bank in a high-risk jurisdiction.
- Refusal to name the load port or vessel - voyage plausibility cannot be checked.
Where these documents live in the deal flow
LOI → SCO → NCNDA → ICPO → FCO → SPA → POF/RWA → LC issuance → shipment. Editable templates for each step are on the Templates hub, with the full sequence walked through in the Commodity Trade Document Checklist.
Frequently asked questions
What is the difference between FCO and SCO?#
A Soft Corporate Offer (SCO) is a non-binding indication of terms - the seller states what they can supply, at approximately what price, on approximately what terms. A Full Corporate Offer (FCO) is a firm, signed, dated offer with a validity period, binding on the seller if accepted within that window. SCOs are conversation starters; FCOs are the document a buyer's bank actually wants to see before issuing an LC.
When should a deal move from SCO to FCO?#
After the buyer has issued an ICPO (Irrevocable Corporate Purchase Order) that matches the SCO terms, and both parties have signed an NCNDA (Non-Circumvention Non-Disclosure Agreement) protecting the intermediary chain. The FCO then locks in exact quantity, quality specification, delivery terms, price and validity - typically 5 to 15 business days.
What clauses should be on every FCO?#
Seven core clauses: (1) exact product specification with an ASTM/ISO reference and a permitted-deviation range; (2) quantity per shipment and total contract; (3) Incoterms 2020 rule with named place; (4) price and price basis (fixed, indexed to a benchmark); (5) payment terms (LC type, tenor, issuing bank); (6) delivery schedule; (7) compliance clauses covering sanctions, EUDR/CBAM if relevant, and dispute-resolution jurisdiction. Missing any one of these creates ambiguity that costs the buyer later.
Is an FCO legally binding?#
An FCO that is signed, dated, addressed to a specific buyer, and states its validity period is a firm offer. Under most legal systems (including CISG Article 15) acceptance during the validity window creates a binding contract without further signature. That is why SCOs are used earlier - they explicitly are not binding, avoiding the seller committing to volumes they may not have secured.
How does the FCO fit into the commodity deal workflow?#
The standard sequence: LOI from buyer → SCO from seller → NCNDA signed by all intermediaries → ICPO from buyer → FCO from seller → SPA (Sales Purchase Agreement) signed → POF from buyer / RWA from seller's bank → LC issued → shipment. Skipping steps (typically the SCO or the NCNDA) is a red flag - see the Commodity Trade Document Checklist for the full sequence and the templates behind each document.