The Grain and FeedTrade Association
GAFTA’s Prime ObjectivesTo Promote International Trade in
Agricultural Commodities and General Produce
To Protect Members Interests
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MEMBERS
1300 MEMBERS in
85 COUNTRIES
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MEMBERS CATEGORIES• Traders • Brokers.• Superintendents.• Spices, Rice and General Produce• Arbitrators.• Professional Bodies.• Analysts.• Fumigant Operators22/12/2011 4
TRADE POLICY AND REPRESENTATION
TRADE POLICY REPRESENTING THE INTERESTS OF
MEMBERS TO AUTHORITIES WORLDWIDE.
CONVEYING PROMPTLY TO MEMBERS ANY INFORMATION
WHICH MAY AFFECT THEIR BUSINESS.
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Events and CPDP
TRAINING & EDUCATION THE CONTINUING PROFESSIONAL
DEVELOPMENT PROGRAMME
WORLDWIDE SEMINARS AND TRAINING COURSES FOR
FOUNDATION TO ADVANCED LEVEL
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CPDP
NEXT MEMBERS EVENTBuenos Aires, Argentina
5-7 March 2011Formation and Fulfilment of
Contractual Obligations22/12/2011 9
CONTRACTS
CONTRACTSGAFTA HAS A RANGE OF 80
STANDARD FORM CONTRACTS
GAFTA HANDLES ON AVERAGE 200 ARBITRATION CASES EACH YEAR
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CONTRACTS FIRST CONSIDERATIONS WHEN TRADING
• IDENTITY OF THE OTHER PARTY
• PRICE
• DELIVERY
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CONTRACTS GAFTA Contracts are standard
trading terms, reflecting the way in which trade
is customarily done.
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What is a Contract?“….. a promise or set of promises which the law will enforce”
“….. an agreement giving rise to obligations which are enforced or recognised by law.”
Chitty on Contracts (29th Edition)
What sort of Risks?• Risks in the goods
• Shipment Risks – risks of moving the goods
• Documentary Risks – risks of documents correctly reflecting the goods
• Legal Risks – passing of risk before title, possession of the goods - ownership of the goods
Different Standard Contract Terms•FOB – Free on Board•CIF – Cost Insurance Freight•C&F – Cost and Freight•X Works •DAF – Delivered at Frontier•etc
A definition - FOB•The Buyer must give “effective shipping instructions”
•Nominate and present an appropriate vessel at the load port in sufficient time•Give correct documentary instructions
A definition – FOB (2)•The Seller must:
•Deliver goods on board a ship which has been nominated by the buyer•Do so at the named port within the period stated in the contract•Bear the cost of loading•Provide goods which conform to the contract•Provide documents as agreed in the contract
A definition - CIF•Seller will provide documents which show that he has
•Obtained goods of the contract description
•Insured them for the intended voyage
•Loaded them within the agreed dates on a vessel he has fixed and paid to carry the goods to the agreed destination,
•Appropriated them to the specific contract, or
•Bought documents from someone else who has done the above
Key parts of the Contract•Identifying the goods •Description•Quality specification
•Identify if the goods provided conform to the contract
Procedures – for measuring the goods•Sampling and Analysis Risk
•Need to compare “like with like”
•Same sampling methods
•Same analysis methods
•Where, when and how?
Preservation of Cargo during Transit•When does risk pass?
•Risk of Condition?
•Requirement for Buyer to receive “satisfactory goods” SOGA 1979 S. 14
•Requirement for a reasonable contract of Carriage - SOGA 1979 S 32(2)
Other Shipment Risks (1)
•Suitability of Vessel•Shipment and Classification Clause•Can vessel reach the port, load and sail safely
•Loading and Discharge•Can port equipment reach the holds?•Appropriate methods / equipment•Stowage and ship safety
Other Shipment Risks (2)
•Time•Time allowed for loading•Whose liability if loading takes longer –demurrage risk•Difference between sale contract and charterparty terms •Loading costs – who pays for stevedoring etc.
Insurance
•Whose duty to insure?
•Terms required under the contract•When does risk in the goods pass•Is the policy provided transferable•Wharehouse to wharehouse cover
Impediments to Performance
•What is performance
•Dealing with problems •Prohibition (of export)•Force Majeure
Other Key aspects of GAFTA Contracts•Domicile
•Notices
•Non-Business Days
•International Conventions
•Arbitration – rules 125 and 126
The Ecomonic Situation• Currency Risk• Non-Performance Risk• Management
Questions / Comments
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