CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 & 89 for containerised transportation

Presented by

ANDREW JACOBS
Managing Director

A. Poortman [London] Ltd.

CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 & 89 for containerised transportation
INTRODUCTION KEYCLAUSES Gafta 88 forCIF/CFRtransactions Gafta 89 forFOBtransactions Innovations#111 SixRecommendations

CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 & 89 for containerised transportation
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. 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.

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.

CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 & 89 for containerised transportation
GAFTAcontractsareusedworldwideas y theyarerecognisedtobeevenhanded totherightsand responsibilitiesofbothsellers/exportersandbuyers/importers y thefairnessandlegalrobustnessofGAFTAArbitrationservice GAFTAhasrespondedtotheneedsofthePulses/SpecialCrops industrywithnewandupdatedcontainerisedcontracts#88&#89 reflectingthecustomsofour trade, introducing11innovations SeparatelyIammakingSixRecommendations

CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 & 89 for containerised transportation
GAFTA#88(forCIF/CFR)and#89(forFOB)willfromJune1st 2010replaceGAFTA#86whichhasbeeninuseforcontainerised transportationforover25years,sothetimehadcometo "refreshandupdate toreflectcurrentcustomsofthetrade GAFTAContractsCommitteecomprises12 industryexpertswith combinedinternationaltradeexperienceofover275years. IwascooptedtorepresentthePulse/SpecialCropstradewith specificandrelevantexperienceofcontainerisedtransportation

CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
Header:Alltypesofpackagingincludedinthetitle bulkorbags,cartons,drumsortins Innovation#1 Clause4:lines2225BROKERAGE StandardGAFTAprovisionthatBrokerageispayablegoods lostornotlost,contractfulfilledornotfulfilled
[unlesscancelledunderProhibitionorForceMajeure clause]

CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
Clause5:lines2748QUALITY Variousoptionsexist Line28:Finalatpointofstuffingcontainer =shippedqualityfinal Line30:Finalattimeandplaceofdischargeorunstuffing ofcontainer =deliveredqualityfinal Line32:Finalaspersealedsample

CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
Clause5:QUALITY cont/ Lines3744:IndependentCertification Innovation#2 butinabsenceofindependence (oftenthecaseinPulses/SpecialCropsindustry) Line3941:theBuyerhastherightofregradingand/oranalysis

ThisconceptisborrowedfromGAFTA24,whichwasspecifically designedbyGAFTAforthePulsetrade20yearsago

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
Clause5:QUALITY cont/. Line46:provisionforFUMIGATION Line48:provisionforshipmentinGOODCONDITION whichaddressessellersresponsibilitytopreparecargo fitfortransit RecommendationOne:Buyershouldstipulateacceptablemoisture contentundergoodsdescription[Lines810]

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
Clause6:lines5064ExtensionofShipment asper standardGAFTAprovision Clause7:lines6673PeriodofShipment optionforpartiestoagreeeither Lines6768:whencontainersareONBOARD OR

Line69:whengoodsarehandedovertocontainerconsortia [RECEIVEDFORSHIPMENT]

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
Clause7:PeriodofShipment cont/ Lines7173:inabsenceofspecificagreement Innovation#3 whengoodsareactuallyhandedovertocontainerconsortia [ReceivedforShipmentB/L]becomesthedefaultoption. RecommendationTwo:BuyerneedstostipulateONBOARD andobtainsellersagreementiftheyrequirethistoughercondition

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
Clause8:lines7577Notificationofshipment(C&Fterms) Sellersadviceofcontainernumber[s]toenableBuyerstoinsure Innovation#4 Clause9:lines7982SalesbyNamedVessel asper standardGAFTAprovision Clause10:lines8488Shipment,ContainersandClassification Line87shallbeincontainersfitforpurpose Innovation#5

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
Clause11:lines90111Appropriation[adviceofshipment] asper standardGAFTAprovision Line111Whenavalidnoticeofappropriationhasbeenreceivedby Buyers,itshallnot bewithdrawn,exceptwiththeirconsent RecommendationThree:Sellerstounderstandthatyouonlygetone chance;ifyoumakeamistakewhenappropriating,youcanonly withdrawappropriationwithBuyersagreement ifappropriationis wrong[sayquantityappropriatedinexcessofcontractualtolerance], Buyerscouldrefuseandcancelcontract

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
Clause12:lines113146Payment Line115:C.A.D.onpresentationofshippingdocuments oralternatively Line116:onarrivalofvesselatdestination Innovation#6 Lines117142:asper standardGAFTAprovision Line143146:interestpayableiftherehasbeenunreasonabledelay inpaymentdoesnot givebuyeroptiontodelay, asClause12atakesprecedent

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
Clause13:lines148149Duties,taxes,levies,etc. asper standardGAFTAprovision Line148:Allexport duties,taxes,leviesetcpresentorfuture incountryoforigin shallbeforSellers account Line149:Allimport duties,taxes,leviesetcpresentorfuture incountryofdestination shallbeforBuyersaccount

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
Clause14:lines151157Weighing optionsavailable Line152:FinalattimeandplaceofloadingatSellersexpense Line153:FinalattimeandplaceofdischargeatBuyersexpense Line157:Independentweighbridgecertification withdeductionofpalletweightwhereappropriate [acknowledgingtrendtoshiponpallets] Innovation#7 Clause15:lines159160Deficiency asper standardGAFTAprovision

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
Clause16:line162Discharge Containersshallbedestuffedpromptlyafterreleaseofthecontainersby theshippingline Innovation#8 Thisacknowledgesthatmanyindustrialendusershavelittleornoraw materialstorageandhavedevelopedthehabitofholdingcargoin containersat,ornear,portofdestinationwithoutdestuffing,thuswithout knowingifqualityreceivedisorisnotcontractualorinsound condition. RecommendationFour:Sellershouldknowyourcustomer, andbe awareifcontainercansitforweeksat,ornear,portofdestination beforedischarge,andreflectonwhatadditionalmeasures shouldbe takentoensurecargoremainsinsoundcondition

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / CFR for containerised transportation

Clause17:lines164195Insuranceasper standardGAFTAprovision Lines167170Riskscovered:CargoClausesWA withaverage, includingWar,Strikes,RiotsandCivilCommotions withfirstclass underwritersorcompaniesdomiciledorcarryingonbusinessinUKand whoprovideanaddressforserviceof[legal]processinLondon

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
RecommendationFive:IconsideritmoreimportanttohaveInsurance ClaimsSettlingAgentspecifiedatPortofDestination thantohaveUK domiciledinsurer,butitisuptobothpartiestoagreethis RecommendationSix: Beawarethereisnoprovisionfordeductable /franchise,cargomustbeinsuredfor102%ofCIFinvoicevalue althoughourcustomistorequireinsurancefor110% ofCIFinvoice value,inordertoputusbackinnoworseplace shouldcargobelost, consideringBuyerwillotherwiselosetheirprofitonthetransaction

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 CIF / C&F for containerised transportation
Clause17.2:lines197200:Insurance cont/ WhilstitisBuyersresponsibilitytocoverinsuranceonC&Ftransaction, ifSellersrequestevidencethatcargohasbeeninsuredandBuyers refuseorfailtoprovideevidence,thenSellersareentitled(butnot obliged)tocoverinsuranceatBuyersexpense ++++++++++++++++++ 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:Alltypesofpackagingincludedinthetitle Innovation#1 Clause4:lines2023:BROKERAGEsameas#88 StandardGAFTAprovisionthatBrokerageispayable goodslostornotlost,contractfulfilledornotfulfilled [unlesscancelledunderProhibitionorForceMajeure clause]

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 89 - FOB for containerised transportation
Clause5:lines2542:QUALITY sameas#88 Variousoptionsexist Line26:Finalatpointofstuffingcontainer=shippedqualityfinal Line28:Finalattimeandplaceofdischargeorunstuffing ofcontainer=deliveredqualityfinal Line30:aspersealedsample Lines3542:IndependentCertification Innovation#2 butinabsenceofindependence (oftenthecaseinPulses/SpecialCropsindustry), theBuyerhastherightofregradingand/oranalysis ThisconceptisborrowedfromGAFTA23,whichwasspecifically designedforthePulsetrade20yearsago Line44:provisionforFUMIGATION Line46:provisionforshipmentingoodCONDITIONwhichaddressesthesellersresponsibilitytoprepare cargofitfortransit

RecommendationOne:Buyershouldstipulateacceptablemoisturecontentin goodsdescription[Lines810]

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 89 - FOB for containerised transportation
Clause6:line48:PlaceofAcceptance atpointofstuffing orcontainerdepot,baseorterminalin.......

Clause7:lines5160:DeliveryPeriod ofstuffedcontainerduring...... Line54:BillofLadingshallbedatedwhenthegoodsarehandedover totheContainerConsortiaortheirAgents =ReceivedforShipmentB/L Innovation#9 Line60:andthecontainernumber Innovation#4

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 89 - FOB for containerised transportation
Clause9:lines6274: ExtensionofHandingOver notstandardGAFTAprovisionforFOBcontract, TraditionallyitisBuyersresponsibilitytofixandprovidethefreight; howeverGAFTAisrespondingtothecustomofthetrade whereitis nowcommonforBuyertonominateashippinglineorloadingagent, thenBuyerreliesonSellertoinitiateplacingofemptycontainerfor loadingandslotonvessel;hencegiving SellersunusualrightofExtensionofHandingOveronFOBcontract FollowingsameprincipleasExtensionofShipmentClauseon#88 Innovation#10

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 89 - FOB for containerised transportation
Clause10:lines7677:Loading Line76: Containersshallbefitforpurpose Innovation#5

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 89 - FOB for containerised transportation
Clause11:lines7999:Payment Line80:C.A.D. ORalternatively Line80:onarrivalofvesselatdestination Innovation#6ORalternatively Line81:..daysfromB/Ldate Innovation#11 Lines8598asperstandardGAFTAprovision same as#88 Lines9598Interestpayableiftherehasbeenunreasonabledelayinpaymentdoesnot givebuyeroptiontodelay,asClause10a takesprecedent Clause12:lines100106Weighing optionsavailable sameas#88

Line102:FinalattimeandplaceofloadingatSellersexpenseORalternatively Line103:FinalattimeandplaceofdischargeatBuyersexpense Line107:Independentweighbridgecertification withdeductionofpalletweightwhereappropriate [acknowledgingtrendtoshiponpallets] Innovation#7

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 89 - FOB for containerised transportation
Clause13:line109:ExportLicence,ifrequired,tobeobtainedbySellers Clause14:lines111112:Duties,taxes,levies,etc. asper standardGAFTAprovision Allexport duties,taxes,leviesetcpresentorfutureincountryoforigin orshipmentforSellers account

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 89 - FOB for containerised transportation
Clause15:lines114117:Insurance sameas#88

WhilstitisBuyersresponsibilitytocoverinsuranceonFOBtransaction,ifSellersrequest evidencethatcargohasbeeninsuredandBuyersrefuseorfailtoprovideevidence,then Sellersareentitled(butnotobliged)tocoverinsuranceatBuyersexpense

++++++++++++++++++

RemainingClauses1625areaspercurrentstandardGAFTAprovisions

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 & 89 for containerised transportation
GAFTAwelcomestradingcompanies toapplyformembership
[NationalOrganisationscannot bemembersofGAFTA]

MembershipApplicationformsareincludedinyourWelcomePack Youwilljoinanelitecluboftheworldspremiertradersincereals, riceandpulses Youwillbenefitfromregularbriefingsandupdatesonchanging globalregulations Youwillbenefitfromhavingatradeorganisationrecognisedall overtheworld,whichlooksafterandrepresentstheinterestsof tradersingrains,feedingstuffsandspecialcrops

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CICILS Convention, Brisbane May 2nd 2010 New GAFTA Contracts 88 & 89 for containerised transportation

CICILShasahighlevelcollaborationwithGAFTA Thesetwoorganisationscomplement eachother Theyshouldnotbeseenasalternatives toeachother

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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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