A palm oil or rubber sales contract should leave nothing to interpretation on five points: what is being sold (specification, test methods and tolerances), how much (quantity and weight basis), when and how it moves (shipment period, Incoterm, ports), how quality is proved (inspection and where results are final), and what happens when something goes wrong (claims, force majeure, default and arbitration). Payment terms and the documents that trigger payment tie it all together.
This checklist covers each clause. It is part of our guide to buying commodities from West Africa.
Standard contract forms
Much of the trade uses standard forms. For oils and fats, the FOSFA contracts are widely used, and PORAM forms are common for palm oil from Malaysia. For natural rubber, trade association contracts and bespoke contracts both appear. A standard form brings established rules on sampling, analysis, claims and arbitration. If you use one, check which clauses your deal changes.
We sell on our own contract terms rather than a standard form, and we send the full contract with every firm offer.
The checklist
Product and specification
- Grade named against a standard, for example crude palm oil, or TSR20 under ISO 2000
- Every limit that matters to you, with numbers and test methods
- Any price adjustment for quality, for example FFA above a base level
- Country of origin
See TSR20 specifications explained and CPO quality parameters.
Quantity and weight
- Quantity in metric tonnes
- Tolerance, for example 5% more or less at seller's option
- Packing: bales, pallets, flexitanks or bulk
- Weight basis: net shipped weight, or landed weight, and who certifies it
Shipment
- Shipment period, for example "March 2027"
- Load port and destination port
- Incoterm, with the Incoterms 2020 reference
- Who books the vessel and who pays freight and insurance
- Notice of readiness and vessel nomination procedure for bulk
Inspection
- Named surveyor and who pays
- Sampling plan
- Where quality and weight are final: at loading or at discharge
- Umpire laboratory and process if results differ
See inspection and certificates of analysis.
Documents
List every document the seller must provide, with the number of originals and copies: bill of lading, invoice, certificate of analysis, weight or quantity certificate, certificate of origin, phytosanitary certificate where needed, and for the EU, the EUDR data package. See export documents explained.
Payment
- Method: LC, CAD or TT, and timing
- Currency and bank details
- Which documents trigger payment
- How bank detail changes are confirmed
See LC vs CAD vs TT.
Claims
- Time limit for quality and weight claims after discharge, for example 30 days
- Evidence required: joint survey, sealed samples, umpire analysis
- How claims are settled: price allowance, replacement or rejection
Force majeure and prolongation
- Events covered, such as port closure, war or government action
- Notice periods
- Extension of the shipment period, and when either side can cancel
Default
- What happens if either side fails to ship or take delivery
- How damages are calculated, usually against the market price
EUDR clause (EU destinations)
- Seller's duty to provide geolocation, legality evidence and chain of custody data
- Format and timing of the data package, before loading
- Remedy if data is missing or wrong
Law and arbitration
- Governing law, often English law in commodity trade
- Arbitration body and seat, for example FOSFA in London for oils
- Language of proceedings
Sanctions and compliance
- Both parties' warranties on sanctions, anti-bribery and anti-money laundering
Red flags in a seller's draft
- No named inspection company, or "seller's own laboratory final"
- Payment before shipment with no document conditions
- No claims clause
- Arbitration in a place with no connection to the trade
Send us your standard terms with your enquiry and we will tell you where our contract differs.