How to Verify a Bulk Commodity Seller Before Issuing an LOI

The goal before an LOI is not to complete the entire transaction diligence file. It is to establish that the request is going to an identifiable, plausible, authorized commercial party under controlled disclosure.

The Canadian Trade Commissioner Service states the basic rule plainly: know who you are dealing with, verify addresses and contact information, and do not proceed when the customer or origin country cannot be identified.

Gate 1: legal identity

Obtain the exact legal company name, registration jurisdiction, registration number, registered or operating address, website, business email domain, and signatory name and title.

Check the relevant official registry. Match the entity across the registry, email domain, documents, invoices, and proposed bank-account name. A similar trading name is not enough.

Gate 2: role and authority

Ask whether the party is the producer, title holder, reseller, mandate, or intermediary. Then request evidence appropriate to that role.

• A producer should be identifiable through official corporate and facility records.
• A reseller should explain its contractual route to the product.
• A mandate should show current authority from the named principal, subject to confidentiality controls.
• An intermediary should disclose the length and control points of the chain.

An NCNDA can protect an introduction. It does not prove seller authority.

Gate 3: product plausibility

Before exposing a buyer identity or signed requirement, confirm that the proposed seller can answer the basic commercial question: product, form, specification, origin, quantity, loading point, packing, schedule, Incoterm, price basis, validity, inspection, documents, and payment procedure.

A generic brochure or old data sheet is not a current offer.

Gate 4: evidence that matches the stage

Early-stage evidence can include a current corporate profile, authority statement, producer or title route, representative product specification, and a coherent procedure.

Later-stage evidence can include lot-linked COA, warehouse or terminal evidence, allocation, inspection access, and bank-channel documents. Sensitive evidence should move only when the buyer and transaction have also passed qualification.

Demanding every private document before showing a credible requirement creates friction and can expose confidential information. Asking for nothing creates fraud risk. The correct control is staged reciprocity.

Gate 5: payment and payee consistency

The legal seller, contracting party, invoice issuer, beneficiary or payee, and bank account name should form a coherent chain. Any third-party payee requires a documented legal and commercial explanation plus bank review.

Never send an advance “registration,” “allocation,” “inspection,” or “KYC” fee because an unsolicited party says it is mandatory. Verify any payment instruction through a known channel and written agreement.

What an LOI should say

Once the seller passes the first gates, the LOI should remain buyer-controlled and transaction-specific. It should state the requirement, the issuing entity and signatory authority, and whether it is non-binding except for any clauses explicitly identified as binding.

Verification reduces false starts. It does not eliminate the need for contract, bank, compliance, logistics, inspection, and title checks before execution.

How can you tell whether a supplier is legitimate?

Start with identity and consistency. The registry entity, email domain, signatory, contract party, invoice issuer and proposed bank-account name should make sense together. Then test whether the party can explain its role and product route without changing the story.

What are the fastest red flags?

An unrelated payee, pressure to pay a registration or allocation fee, refusal to identify the legal seller, a quote with no named place or validity, and copied evidence that cannot be tied to the proposed lot all justify a pause.

Do not demand bank-channel POP or unrestricted buyer disclosure at first contact. Present a coherent requirement and explain the next evidence gate. The printable due-diligence checklist keeps early and later checks separate.

Sources and review record

These are the primary or authoritative sources used for this explainer. Listing a source does not imply endorsement of GMC.

1. Verify the credibility of an organization abroad Canadian Trade Commissioner Service · reviewed August 26, 2026
2. Step-by-Step Guide to Exporting: selecting an intermediary Canadian Trade Commissioner Service · reviewed August 26, 2026