What Is an ICPO in Commodity Trading?
In one line
An ICPO — Irrevocable Corporate Purchase Order — is a document in which a buyer states a firm intention to purchase a specific commodity on specific terms. Despite the word "irrevocable", it is normally a pre-contractual document: the binding obligations come from the SPA that follows.
What an ICPO is
In physical commodity trading, the first piece of paper a seller usually asks a new buyer for is an ICPO. It sets out, on the buyer's letterhead and over an authorised signature, exactly what the buyer wants to buy and on what terms. Its purpose is to move a conversation from "we are interested in diesel" to a specific, quotable request.
The word irrevocable does a lot of work in the name and rather less in law. An ICPO is not a contract of sale. It is a statement of intent detailed enough that a seller can respond with a firm offer. What binds the parties is the sale and purchase agreement signed later.
What belongs in an ICPO
- Buyer identity — full legal entity name, registration number, registered address. Not a trading name or an individual.
- Commodity and specification — the grade, not just the product. "EN590 10ppm", not "diesel".
- Quantity — per shipment and in total, with tolerance (for example 50,000 MT +/- 5%).
- Incoterm and port — CIF Rotterdam and FOB Houston are different deals with different cost and risk.
- Delivery schedule — spot, or a monthly quantity over a contract period.
- Price or pricing formula — either a target price or a benchmark plus differential.
- Payment instrument — documentary letter of credit, standby LC, cash against documents.
- Inspection — who appoints the inspector, and whose result is binding.
- Validity — how long the order stands.
- Signatory — name, title and authority of the person signing.
An ICPO missing the legal entity, the specification or the Incoterm is not really an order. It is a wish.
ICPO vs LOI vs FCO
These three appear constantly and are frequently confused:
- LOI (letter of intent) — buyer-side, softer, opens a discussion.
- ICPO — buyer-side, firmer, states an order at specific terms.
- FCO (full corporate offer) — seller-side, the offer that responds to one.
The usual sequence is LOI or ICPO from the buyer, FCO from the seller, negotiation, then an SPA. In practice the order varies and the labels get used loosely.
An ICPO is trivially easy to produce. It is a Word document. On its own it tells you nothing about whether the buyer exists, has funds, or has authority to sign — and requests for an ICPO "with banking details attached" before any company verification are a common pattern in advance-fee approaches. Verify the company first; exchange documents second.
What to check before you act on one
- Does the entity exist? Check the registration number against the issuing registry, not against a PDF the counterparty sent you.
- Does the signatory have authority? Compare against the register of directors, or a power of attorney.
- Do the names match? The entity on the ICPO, the entity on the bank account and the entity on the contract should be the same. A payment account in a third party's name is a red flag.
- Is the entity or its ownership sanctioned? Screen the company and its ultimate beneficial owners, and re-screen as lists change.
- Is the specification real? An order for a grade that does not exist, or a quantity far beyond the destination's consumption, deserves a second look.
Where Lodfy fits
The document is only ever as good as the company behind it. Lodfy verifies the company itself — KYB on the entity, KYC on its officers, ultimate beneficial ownership, and sanctions screening against the UN, EU, UK and US lists — so you know who you are exchanging paper with before you exchange any. Our free template library includes ICPO, FCO, LOI, SPA, BCL and NCNDA drafts, and the trade glossary defines the terms that appear inside them.
Frequently asked questions
What does ICPO stand for?
Irrevocable Corporate Purchase Order. It is a document in which a buying company states its firm intention to purchase a specified commodity, in a stated quantity, at a stated price or pricing formula, under stated Incoterms and delivery dates.
Is an ICPO legally binding?
Usually not in the way the word 'irrevocable' suggests. An ICPO is generally a pre-contractual document; the binding obligations are created by the sale and purchase agreement (SPA) that follows. Whether any part of it binds depends on its wording and the governing law, so take legal advice rather than assuming either way.
What should an ICPO contain?
Full legal name and registration details of the buyer, the commodity with its specification or grade, quantity and any tolerance, Incoterm and named port, delivery or shipment schedule, price or pricing formula, payment instrument, inspection arrangements, validity period, and the name and title of the authorised signatory.
Why do sellers ask for an ICPO before quoting?
To filter enquiries. Preparing a firm offer costs time, and a signed ICPO from a named legal entity is a signal that the buyer is real and specific about what it wants. It is a weak signal on its own — the document is easy to produce — which is why sellers pair it with company verification.
What is the difference between an ICPO and an LOI?
An LOI is softer: it expresses interest and opens discussion. An ICPO is meant to be a firm order at stated terms. In practice the two are often used interchangeably, and neither substitutes for verifying the counterparty.
This article is general information about market practice, not legal advice. Whether any particular document binds you depends on its wording and its governing law — take advice on your own contracts.