4 New GAFTA Contracts 88 89 Andrew Jacobs a. Poortman UK
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Transcript of 4 New GAFTA Contracts 88 89 Andrew Jacobs a. Poortman UK
Presented by Presented by
ANDREW JACOBSANDREW JACOBS Managing DirectorManaging Director
A. A. PoortmanPoortman [London] Ltd.[London] Ltd.
CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 & 89 for containerised transportation
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 & 89 for containerised transportation
• KEY CLAUSES• Gafta
88 – for CIF / CFR transactions
• Gafta
89 – for FOB transactions
Innovations # 1 ‐11
Six Recommendations
• INTRODUCTION
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 & 89 for containerised transportation
GAFTA provides many services which include training courses and distance learning programmes, trade policy representation, a quality assurance scheme, as well as standard forms of contracts with supporting rules for the transboundary movement of goods globally.
The Grain and Feed Trade Association, GAFTA, represents the international trade in grain, feed, pulses, rice, spices and general produce. The Association started over 130 years ago. It currently has almost 1200 members in 85 countries and has offices in London, Geneva, Beijing and Kiev.
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 & 89 for containerised transportation
There are a number of risks in trading. The risk of the goods, the shipment risks as well as documentary risks.
It is a feature of shipping that it depends upon a variety of commercial activities. The need for goods to comply with their contractual provisions is highly important.
GAFTA therefore provides standard forms of contracts and supporting rules to complement the essential elements of the trades, (such as price, quantity, time and place of shipment/delivery and quality) and sets down the means and methods by which a contract is to be performed.
It is therefore important to GAFTA that its standard forms of contract represent the customary practice in the trade.
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GAFTA contracts are used world‐wide asthey are recognised to be even handed to the rights andresponsibilities of both sellers/exporters and buyers/importersthe fairness and legal robustness of GAFTA Arbitration service
CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 & 89 for containerised transportation
GAFTA has responded to the needs of the Pulses / Special Crops industry with new and updated containerised contracts # 88 & # 89
reflecting the “customs of our
trade”, introducing 11 innovations
Separately I am making Six Recommendations
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 & 89for containerised transportation
GAFTA # 88 (for CIF/CFR) and # 89 (for FOB) will from June 1st 2010 replace GAFTA # 86 which has been in use for containerised
transportation for over 25 years, so the time had come to "refresh and update”
to reflect current “customs of the trade”
GAFTA Contracts Committee comprises 12
industry experts with combined international trade experience of over 275 years.
I was co‐opted to represent the Pulse/Special Crops trade with specific and relevant experience of containerised transportation
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&Ffor containerised transportation
Clause 4: lines 22‐25 BROKERAGE
Standard GAFTA provision that Brokerage is payable “goods lost or not lost, contract fulfilled or not fulfilled”
[unless cancelled under Prohibition or Force Majeure
clause]
Header: All types of packaging included in the title bulk or bags, cartons, drums or tins ‐
Innovation # 1
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&Ffor containerised transportation
Clause 5: lines 27‐48 QUALITY
Various options exist
• Line 28: Final at point of stuffing container = “shipped quality final”
• Line 30: Final at time and place of discharge or unstuffing
of container= “delivered quality final”
• Line 32: Final “as per sealed sample”
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&F for containerised transportation
Clause 5: QUALITY
cont/…
• Lines 37‐44: Independent Certification ‐
Innovation # 2but in absence of independence(often the case in Pulses/Special Crops industry)
• Line 39‐41: the Buyer has the right of re‐grading and/or analysis
This concept is borrowed from GAFTA 24, which was specifically designed by GAFTA for the Pulse trade 20 years ago
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&F for containerised transportation
Clause 5: QUALITY
cont/….
• Line 46: provision for FUMIGATION
• Line 48: provision for shipment in GOOD CONDITION which addresses seller’s responsibility to prepare cargo “fit for transit”
Recommendation One: Buyer should stipulate acceptable moisture content under goods description [Lines 8‐10]
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&F for containerised transportation
Clause 6: lines 50‐64 Extension of Shipmentasper
standard GAFTA provision
Clause 7: lines 66‐73 Period of Shipmentoption for parties to agree either
• Lines 67‐68: when containers are “ON BOARD”
OR
• Line 69: when goods are handed over to container consortia[“RECEIVED FOR SHIPMENT”]
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&F for containerised transportation
Clause 7: Period of Shipment
cont/…
• Lines 71‐73: in absence of specific agreement –
Innovation # 3when goods are actually handed over to container consortia [Received for Shipment B/L] becomes the default option.
Recommendation Two: Buyer needs to stipulate “ON BOARD”and obtain sellers agreement if they require this tougher condition
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&F for containerised transportation
Clause 8: lines 75‐77 Notification of shipment (C&F terms)
Sellers advice of container number[s] to enable Buyers to insure – Innovation # 4
Clause 9: lines 79‐82 Sales by Named Vesselasper
standard GAFTA provision
Clause 10: lines 84‐88 Shipment, Containers and Classification• Line 87 shall be in “containers fit for purpose” – Innovation #5
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&F for containerised transportation
Clause 11: lines 90‐111 Appropriation [advice of shipment] asper
standard GAFTA provision
• Line 111 “When a valid notice of appropriation has been received by Buyers, it shall not
be withdrawn, except with their consent”
Recommendation Three: Sellers to understand that you only get one chance; if you make a mistake when appropriating, you can only
withdraw appropriation with Buyer’s agreement – if appropriation is wrong [say quantity appropriated in excess of contractual tolerance],
Buyers could refuse and cancel contract
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&F for containerised transportation
Clause 12: lines 113‐146 Payment
• Line 115: C.A.D. on presentation of shipping documents or alternatively
• Line 116: on arrival of vessel at destination –
Innovation # 6
• Lines 117‐142: asper
standard GAFTA provision
• Line 143‐146: interest payable if there has been unreasonable delay in payment does not
give buyer option to delay,
as Clause 12a takes precedent
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&F for containerised transportation
Clause 13: lines 148‐149 Duties, taxes, levies, etc.asper
standard GAFTA provision
• Line 148: All export
duties, taxes, levies etc present or future in country of origin
shall be for Seller’s
account
• Line 149: All import
duties, taxes, levies etc present or future in country of destination
shall be for Buyer’s account
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&F for containerised transportation
Clause 14: lines 151‐157 Weighing
–
options available
• Line 152: Final at time and place of loading at Seller’s expense
• Line 153: Final at time and place of discharge at Buyer’s expense
• Line 157: Independent weighbridge certification with deduction of pallet weight where appropriate [acknowledging trend to ship on pallets] Innovation # 7
Clause 15: lines 159‐160 Deficiencyasper
standard GAFTA provision
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&F for containerised transportation
Clause 16: line 162 DischargeContainers shall be de‐stuffed promptly after release of the containers by
the shipping line
–
Innovation # 8
This acknowledges that many industrial end users have little or no raw material storage and have developed the habit of holding cargo in
containers at, or near, port of destination without de‐stuffing, thus without knowing if quality received is or is not contractual or in sound
condition.
Recommendation Four: Seller should ‘know your customer,’
and be aware if container can sit for weeks at, or near, port of destination
before discharge, and reflect on what additional measures
should be taken to ensure cargo remains in sound condition
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / CFR for containerised transportation
Clause 17: lines 164‐195 Insurance asper
standard GAFTA provision
• Lines 167‐170 Risks covered: “Cargo Clauses WA – with average, including War, Strikes, Riots and Civil Commotions”
with first class
underwriters or companies domiciled or carrying on business in UK and who provide an address for service of [legal] process in London
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&F for containerised transportation
Recommendation Five: I consider it more important to have Insurance Claims Settling Agent specified at Port of Destination
than to have UK
domiciled insurer, but it is up to both parties to agree this
Recommendation Six:
Be aware there is no provision for “deductable / franchise”, cargo must be insured for 102% of CIF invoice value –
although our custom is to require insurance for 110%
of CIF invoice value, in order to put us back in “no worse place”
should cargo be lost,
considering Buyer will otherwise lose their profit on the transaction
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 – CIF / C&F for containerised transportation
Clause 17.2: lines 197‐200: Insurance
cont/…
Whilst it is Buyer’s responsibility to cover insurance on C&F transaction, if Seller’s request evidence that cargo has been insured and Buyers
refuse or fail to provide evidence, then Sellers are entitled (but not obliged) to cover insurance at Buyer’s expense
++++++++++++++++++
Remaining Clauses 18-28 are as per current standard GAFTA provisions
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 89 - FOB for containerised transportation
Header: All types of packaging included in the title ‐
Innovation # 1
Clause 4: lines 20‐23: BROKERAGE same as # 88
Standard GAFTA provision that Brokerage is payable “goods lost or not lost, contract fulfilled or not fulfilled”[unless cancelled under Prohibition or Force Majeure
clause]
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 89 - FOBfor containerised transportation
Clause 5: lines 25‐42: QUALITY same as # 88Various options exist• Line 26: Final at point of stuffing container = “shipped quality final”• Line 28: Final at time and place of discharge or unstuffing of container = “delivered quality final”• Line 30: “as per sealed sample”• Lines 35‐42: Independent Certification ‐ Innovation #2
but in absence of independence (often the case in Pulses/Special Crops industry),the Buyer has the right of re‐grading and/or analysis
This concept is borrowed from GAFTA 23, which was specifically designed for the Pulse trade 20 years ago
• Line 44: provision for FUMIGATION• Line 46: provision for shipment in good CONDITION which addresses the seller’s responsibility to preparecargo “fit for transit”
Recommendation One: Buyer should stipulate acceptable moisture content in
goods description [Lines 8‐10]
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 89 - FOBfor containerised transportation
Clause 6: line 48: Place of Acceptanceat point of stuffing
or container depot, base or terminal in .......
Clause 7: lines 51‐60: Delivery Period
of stuffed container during ......
• Line 54: Bill of Lading shall be dated when the goods are handed over to the Container Consortia or their Agents= Received for Shipment B/L Innovation # 9
• Line 60: “and the container number”
–
Innovation # 4
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 89 - FOBfor containerised transportation
Clause 9: lines 62‐74:
Extension of Handing Overnot standard GAFTA provision for FOB contract,
Traditionally it is Buyer’s responsibility to fix and provide the freight; however GAFTA is responding to the “custom of the trade”
where it is
now common for Buyer to nominate a shipping line or loading agent, then Buyer relies on Seller to initiate placing of empty container for
loading and slot on vessel; hence giving
Seller’s unusual right of Extension of Handing Over on FOB contract Following same principle as Extension of Shipment Clause on # 88Innovation # 10
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 89 - FOBfor containerised transportation
Clause 10: lines 76‐77: Loading
• Line 76:
Containers shall be fit for purpose –
Innovation # 5
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 89 - FOBfor containerised transportation
Clause 11: lines 79‐99: Payment
Line 80: C.A.D. OR alternativelyLine 80: on arrival of vessel at destination – Innovation # 6 OR alternativelyLine 81: .. days from B/L date – Innovation #11Lines 85‐98 as per standard GAFTA provision same as # 88Lines 95‐98 Interest payable if there has been unreasonable delay in payment does not
give buyer option to delay, as Clause 10a takes precedent
Clause 12: lines 100‐106 Weighing
–
options available
same as # 88
Line 102: Final at time and place of loading at Seller’s expense OR alternativelyLine 103: Final at time and place of discharge at Buyer’s expenseLine 107: Independent weighbridge certification
with deduction of pallet weight where appropriate [acknowledging trend to ship on pallets] Innovation # 7
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 89 - FOBfor containerised transportation
Clause 13: line 109: Export Licence, if required, to be obtained by Sellers
Clause 14: lines 111‐112: Duties, taxes, levies, etc.asper
standard GAFTA provision
All export
duties, taxes, levies etc present or future in country of origin or shipment for Seller’s
account
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 89 - FOBfor containerised transportation
Clause 15: lines 114‐117: Insurance
same as # 88
Whilst it is Buyers responsibility to cover insurance on FOB transaction, if Sellers request
evidence that cargo has been insured and Buyers refuse or fail to provide evidence, thenSellers are entitled (but not obliged) to cover insurance at Buyer’s expense
++++++++++++++++++
Remaining Clauses 16‐25 are as per current standard GAFTA provisions
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 & 89 for containerised transportation
GAFTA welcomes trading companies
to apply for membership
[National Organisations can not
be members of GAFTA]
Membership Application forms are included in your Welcome Pack
You will join an elite club of the world’s premier traders in cereals,
rice and pulses
You will benefit from regular briefings and up‐dates on changing
global regulations
You will benefit from having a trade organisation recognised all
over the world, which looks after and represents the interests of
traders in grains, feeding stuffs and special crops
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 & 89 for containerised transportation
CICILS has a high level collaboration with GAFTA
These two organisations “complement”
each other
They should not be seen as “alternatives” to each other
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 & 89 for containerised transportation
My name is Andrew Jacobs, Managing Director of A. Poortman (London) Ltd
We are specialist importers, distributors and inventory holders of quality Pulses, both conventional and organic, Birdseeds and organic Coffee
with offices in UK [head office], Holland [branch office] and China [own processing and export].
I am proud to have been associated with GAFTA & CICILS for more than 30 years
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CICILS Convention, Brisbane May 2nd 2010
New GAFTA Contracts 88 & 89 for containerised transportation
Any questions ?
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