Letter of Authorization

A Letter of Authorization (LOA) is a written authorization document issued by a principal (such as an importer, exporter, or cargo owner) to an agent (such as a freight forwarder, customs broker, bank, or third party) in foreign trade, used to specify the scope of authorization, validity period, and responsibilities. Common scenarios include: authorizing a freight forwarder to book space, clear customs, and pick up goods; authorizing a bank to collect payment or handle documents; authorizing a third party to sign contracts or documents. Its core function is to prove that the agent has legal agency authority and to prevent unauthorized actions. Precautions: specify the authorized matters, validity period, both parties' information, and signatures/seals; avoid vague expressions such as 'full authorization'; if funds or cargo rights are involved, specify the amount, cargo description, and responsibility allocation. Unlike an 'agency agreement', an LOA is usually a unilateral authorization and does not necessarily include consideration clauses; compared with a 'power of attorney', an LOA focuses more on specific business operations rather than corporate governance-level authorization. Foreign trade practitioners should ensure that the LOA content is consistent with the contract and letter of credit terms to prevent refusal of payment or legal disputes due to unclear authorization.