Содержание
Notice of Appropriation is the seller’s notification linking a specific cargo to the contract. In grain trading, it’s typically an email, not a formal sealed document — but GAFTA proformas strictly regulate what must be in it.
Miss the deadline or get it wrong, and the buyer can reject the goods and terminate the contract, even if the cargo is already loaded on the vessel. One day late = contract terminated.
Appropriation applies to CIF and CFR (C&F) contracts — where the seller arranges shipment. In FOB contracts the buyer nominates the vessel, so no separate appropriation mechanism exists.
What is appropriation and how does it relate to risk transfer?
Appropriation means linking specific goods to your contract. Before appropriation, a CIF/CFR buyer doesn’t know which vessel carries their cargo or when it was shipped.
Under CIF and CFR, risk technically passes to the buyer at shipment. But in GAFTA practice, this only matters when goods are linked to your specific contract — when the seller sends valid notice of appropriation (assuming the B/L is issued). Until then, you can’t exercise rights over the cargo, and the seller can’t demand payment.
That’s why notice of appropriation isn’t formality — it’s the critical moment of contract performance.
The Notice of Appropriation Mechanism in GAFTA Contracts
Let’s use GAFTA 48 — the standard proforma for grain on CIF/CIFFO/C&F/C&FFO terms — as our example. Other GAFTA proformas have different appropriation rules, so always check your contract’s specific form.
Deadline for Sending Notice
Under GAFTA 48 Clause 11(b), the seller must send notice within 3 business days from the date of the last bill of lading.
Under Clause 22, non-business days include Saturdays, Sundays, and officially recognized holidays of the respective countries, plus any days GAFTA declares as non-business.
The phrase “respective countries” creates a practical problem: if seller is in Ukraine and buyer in Switzerland, whose holidays count? Either clarify this in the contract or take the safe route — count holidays of both countries.
What Must Be in the Notice of Appropriation
Under GAFTA 48 Clause 11(a), the notice must contain four mandatory elements:
- Vessel’s name — the exact name of the ship carrying the goods
- Port of shipment — the port from which the goods were dispatched
- Presumed weight shipped — the weight of goods loaded onto the vessel
- Date or presumed date of the bill of lading — the exact or expected date of the bill of lading
If the notice lacks any one of these elements, the buyer may reject it and demand correction.
The notice must be sent to the address specified in the contract (the buyer, its agent, or the Selling Agent/Brokers), in writing, with proof of dispatch available.
String Appropriation: Passing Notice Down the Chain
Grain typically flows through multiple traders:
Producer → Trader A → Trader B → Consumer
Each trader receives notice from their seller and must pass it to their buyer on time. This is string appropriation.
GAFTA 48 Clause 11(c) sets special rules for passing notice down the chain. Each seller must pass the notice within the same 3 business days. But if notice arrives on the last day of the deadline or later, the 1600-hours rule kicks in:
- Notice received before 16:00 on a business day → pass it same calendar day
- Notice received after 16:00 or on a non-business day → pass it by 16:00 next business day
If Trader A gets notice at 15:50 on the final day, they must pass it that same day. Fail to do that, and the buyer can terminate and claim damages under the default clause — even if the cargo is fine and was loaded during the shipment window.
Consequences of Late or Defective Notice
Breach of Condition
Late or defective notice is a breach of condition, not a warranty. That means the buyer can’t just claim compensation — they get full contract termination and damages.
Even one day late = buyer can reject the notice, reject the cargo, and claim default damages.
Deemed Default
GAFTA 48 has an automatic default mechanism. Under Clause 24(f), if notice hasn’t been delivered by the 5th business day after the final day for appropriation, the seller is in default automatically. Default date = first business day after that.
Clause 24(f) also lets the seller self-declare default anytime after the shipment period expires. Default date = first business day after they notify the buyer.
See “GAFTA Default Clause: How the Default Clause Works” for how damages are calculated.
Key Points When Sending Notice of Appropriation
One mistake in your notice can get it rejected or trigger default. Focus on these:
Calendar Days vs. Business Days
Some clauses count calendar days, others business days. For GAFTA 48 notice of appropriation, it’s business days. Confuse them and your notice gets rejected as late.
All Four Elements Required
Clause 11(a) requires: vessel name, port of shipment, presumed weight, and B/L date. Missing any one or stating it vaguely (“as per B/L” instead of exact weight) gives the buyer grounds to reject.
Which Errors Can Be Fixed?
Under Clause 11(e), the B/L date is for information only — the actual B/L date controls the deadline. So a wrong B/L date doesn’t kill the notice. But errors in vessel name, port, or weight have no such exception.
Under Clause 11(f), you can correct errors in transmission — mistakes that happened during delivery. This is narrow: your own errors aren’t “transmission errors”.
Best practice: add “OBN” (or better name) after the vessel name. This lets you fix vessel name spelling without risking rejection.
Valid vs. Defective Notice: Different Rules
A valid notice (meeting all Clause 11(a) requirements) under Clause 11(h) cannot be withdrawn without the buyer’s consent. The seller is stuck with it.
A defective notice (errors or incomplete) is different. The seller can withdraw it and send a new one — if the new one arrives within the contract period. But if the buyer accepts a defective notice without comment, the buyer may lose the right to object later.
If you receive defective notice: expressly reserve your rights in writing. Don’t just accept it silently — you’ll lose the right to reject.
Bottom Line
Notice of Appropriation is the critical moment in CIF/CFR performance. Late or incomplete notice = breach of condition = buyer can terminate and claim damages, even if the cargo is perfect.
Questions about notice of appropriation or need help with GAFTA arbitration? Contact me:
