A CIF grain contract, shipment period: July. The vessel is brought alongside on 30 July, loading runs all night, and the final tonnes drop on board at 01:30 on 1 August. The master signs the bill of lading and dates it “31 July”. Formally everything looks clean: the B/L is dated the last day of the shipment period. But the loading was actually finished in August. The question is simple and uncomfortable at the same…
Legal costs in GAFTA and FOSFA arbitration are recoverable from the losing party, subject to certain conditions. The recovery regime in both forums departs from the English default of “costs follow the event” and operates differently in each: in GAFTA, each party bears its own legal costs as a rule, and recovery is only possible where the parties have entered into an express written agreement; in FOSFA there is no such prohibition, and legal costs…
In an FOB contract on FOSFA or GAFTA forms, vessel nomination is not a formality but a key buyer’s obligation, the breach of which under English law can cost the contract. If the notice is given even one day late, the seller may be entitled to refuse to load and claim damages. But not every defect in a nomination is the same: courts distinguish situations where the breach genuinely gives a right to terminate from…
Industry estimates suggest that 60–75% of initial document presentations under letters of credit are rejected by banks due to discrepancies with the L/C terms. For a seller who has already shipped goods and expects payment, a bank’s refusal is a serious problem. The roots of this problem lie in one fundamental principle: strict compliance with documentary requirements. In our overview article on letters of credit we covered the general mechanics of L/Cs—how they are opened,…
In grain trading, shipment disruptions are routine. Export embargoes, strikes, war, natural disasters — any of these can make loading impossible. Standard GAFTA contracts include a specific mechanism for this: the Prevention of Shipment clause. In this article, I’ll explain how it works, what events it covers, what procedures must be followed, and what happens if a seller gets it wrong. Why Prevention of Shipment Exists Under English law, a contract for sale creates strict…
When a contracting party breaches a contract, the injured party is entitled to compensation for damages. But English law does not permit the injured party to simply sit back and watch losses mount. It requires the injured party to take reasonable steps to mitigate its losses — this is the principle of mitigation of damages. For a trader facing non-performance of a GAFTA or FOSFA contract, understanding mitigation is a practical matter: what steps should…
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…
Default clause is a damages compensation mechanism built into standard GAFTA contracts. When one party commits a material breach (breach of condition), the injured party may declare default and demand compensation equal to the difference between the contract price and the market price of the goods on the date of default. The fundamental difference from the general rules for damages recovery under English law: the GAFTA default clause locks in a specific formula for calculating…
As of 1 October 2025, several amendments to Gafta contracts and arbitration rules have come into effect. The changes include revised provisions on delivery under a Letter of Indemnity (LOI), modified appropriation deadlines in several proformas, clarification of the “deemed default” date, a shorter deposit payment period under Gafta 126, finality of quality under Gafta 47 and 49, the introduction of a sampling clause for EU deliveries, and the standardisation of electronic submissions under Gafta…
The English High Court has handed down a decision affecting the rights of grain traders to recover unpaid contractual prices, overturning three GAFTA awards worth over USD 22 million. The case of Trans Trade RK SA v State Food and Grain Corporation of Ukraine [2025] EWHC 1803 (Comm) (17 July 2025) highlights the critical distinction between a seller’s right to claim the full price of the goods and the right to claim damages only. Background:…
