Minimum Guarantee

• A minimum guarantee works when the buyer pays a certain minimum.
  • This may only cover the cost of carriage, freight and insurance.
  • It should only be used with well established customers with excellent credit ratings.
  • A minimum guarantee works well when the price of the product fluctuates due to market demand.
  • The seller has the right to inspect the buyer's records to verify all sales.

• The advantange of a minimum guarantee is that the exporter has a firm order to sell.
  • The price may be very low, but at least there is a minimum guarantee.
  • The minimum guarantee may be assured through a letter of credit.

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© 2004 John Michael Pierobon

Notes