 | ANEXAMPLE
INDEXof a CONTRACT andTERMS AND DEFINITIONS
In a contract, it should be an endeavor to have at least these
clauses listed below included. The wordings should be left to your
legal department to be completed.
CLAUSE 1 - SCOPE OF THE CONTRACT
CLAUSE 2 - COMMODITY
CLAUSE 3 - QUANTITY
CLAUSE 4 - TIME PERIOD
CLAUSE 5 - QUALITY
CLAUSE 6 - PRICE
CLAUSE 7 - PAYMENT
CLAUSE 8 - BANKING PROCEDURE
CLAUSE 9 - DOCUMENTS
CLAUSE 10 - DELIVERY
CLAUSE 11 - INSPECTION - QUANTITY-QUALITY DETERMINATIONS
CLAUSE 12 - INSURANCE
CLAUSE 13 - SANCTIONS (NON-PERFORMANCE)
CLAUSE 14 - CLAIMS
CLAUSE 15 - TAXES, OBLIGATIONS AND IMPORTS
CLAUSE 16 - LIABILITY EXEMPTIONS
CLAUSE 17 - APPLICABLE LAW
CLAUSE 18 - BREACH
CLAUSE 19 - ARBITRATION
CLAUSE 20 - SPECIAL CONDITIONS
CLAUSE 21 - LAYTIME – DEMURRAGES
CLAUSE 22 - LETTER OF INDEMNITY
CLAUSE 23 - ASSIGNMENT
CLAUSE 24 - GENERAL
CLAUSE 25 - SELLER’s LEGAL ADDRESS
CLAUSE 26 - BUYER’s LEGAL ADDRESS
CLAUSE 27 - CONCLUSION
SIGNATURES OF THE PARTIES
ANNEX 1 SPECIFICATIONS
ANNEX 2 LOADING SCHEDULE
ANNEX 3 LETTER OF INDEMNITY
ANNEX 4 BANK GUARANTEE TEXT
ANNEX 5 MESSAGE TEXT
ANNEX 6 MESSAGE REPLY TEXT
ANNEX 7 BANK READINESS TO PROCEED
General Terms andDefinitions, as set out by the
INCOTERMS Edition 2010
SOME TERMS AND DEFINITIONSYOU MIGHT SEE
Affiliateshall mean any company or corporation of Seller or
Buyer which owns directly or indirectly fifty (50) percent or
more of the shares carrying voting rights of such Party (Party
company) and any company or corporation other than such
Party of which such parent company or such Party owns
directly or indirectly fifty (50) percent or more of the shares
carrying voting rights.
APIshall mean American Petroleum Institute.
Reference: AMERICAN PETROLEUM INSTITUTE STANDARDS
in effect as of JULY 1, 1993.
Agreementshall mean the CRUDE OIL Sales / Purchase
Agreement of which these specific provisions agreed to
between Buyer and Seller form the conditions of sale and
purchase.
ASTMAmerican Society for Testing and Materials, is the
institute, internationally recognized, that approved all
Standards, Tests and Procedures used in the Oil Industry
and to be referred in The Contract to the latest revised
edition with amendments in force todate.
Billof LadingThe official document, issued at the load
port after completion of the loading operations, stating,
among other things, the ship's loaded quantity. This
document has to be signed in original by theship's master
and made out in accordance with the instruction hereinafter
specified in the agreement.
CalendarQuarterPeriod of 3 (Three) consecutive months;
Starting as, 1st January, 1st April, 1st July or 1st October.
CargoShall mean any particular quantity of the Oil loaded,
or to be loaded, into a Vessel as set out in the Agreement.
PartCargo shall mean when a Cargo is dischargedin more
than one Discharge Port or received by more than one
receiver at the Discharge Port.
CIFCost, insurance and freight. Strictly as referred to in the
interpretations defined by the INCOTERMS Edition 2000 with
latest amendments.
Commencementof Discharge Shall, in respect of a Cargo,
mean the final connection of discharge hose(s) or arm(s) prior
to the discharge of the Cargo.
CommodityReferred to as being [<THECRUDE OIL NAME: AZUT, SLCO, BLCO etc.>]
elsewhere in the Contract also referred to as "Product" which
specifications are detailed in the Annex No. 1 which is
integral part of this Contract.
Completionof DischargeShall, in respect of a Cargo, mean the final disconnection of the
discharge hose(s) or arm(s) following the discharge of the Cargo.
DayMeans a Calendar day, unless differently specified.
Gradeshall mean grade of the Crude Oil specified in this Agreement.
LoadingDate The date mutually accepted by both theSeller and the Buyer as the date on
which the nominated International Surveyor Company has ascertained the
quantity and quality of the Crude Oil pumped into the Buyer'sdesignated Vessel.
DeliveryDate The date mutually accepted by bothSeller and Buyer is the date on which
the Master of the chartered vessel shall advise notice of
readiness (N.O.R.) to the Port Authority at the discharge terminalfacilities.
Dollars,USD, or US Dollars shall mean dollars ofthe United States of America.
ExecutionDateThe date on which the Seller and the Buyer receive their respective
original copies of this Contract, or as may be indicated otherwise
in The Contract.
LAYTIMEshall mean the time allowed for the vessel's Cargo to be loaded/discharged
without incurring demurrage (36 + 36 hours).
GallonA unit of volume equivalent to 231 cubic inches or 0.3785 cubic meters,
all measured at 60 degrees F
MetricTonA measure of weight equivalent to 1,000 Kg (One Thousand Kilogrammass).
MonthMeans a Gregorian calendar month.
Quartershall mean a period of the three (3) consecutive months commencing on
the first (1st) day of January, or the first (1st) day of April or
the first (1st) day of July or first (1st) day of October.
Yearshall mean a calendar year commencing on the first (1st) day of January
OutTurnThe quantity and quality of the product ascertained, according to theASTM
procedures, warranty of condition on arrival at agreed discharge portand
inspection before payment. The so determined out - turn quantity and
quality is the base on which the amount will be computed for thepayment
of the product effectively delivered to the Buyer.
Partiesshall mean Seller and Buyer jointly.
PlattsPlatts is the organization, internationally recognized and acceptedwhich
publishes official market scans of Petroleum products on a daily basis.
DischargePort shall, with respect to a Cargo, meanthe port(s) nominated
by Buyer and accepted by Seller for discharge of such Cargo in
accordance with this Agreement.
POP-Proofof ProductDocumentation relating to the goods sold, to be provided by
the Seller to the Buyer through bank to bank.
POF-Proofof FundDocumentation relating to the goods to buy, to be provided by
the Buyer to the Seller through bank to bank using LC or equivalent.
USBarrel The unit of volume measured atstandard temperature
of 60 (Sixty) degrees Fahrenheit and equal to 42 (Forty Two) US Gallon.
Vesselshall mean the ship, whether owned or chartered or
otherwise obtained by Seller and employed by Seller to
ship the Cargo to the Discharge Port
BCL-Bank Capability Letter LOI- Letters of Intent
ICPO-OIL. Irrevocable Corporate Purchase Order
FCO-Full Corporate Offer
ASWP- Any Safe World Port. It is quite common for commodity sellers to
offer delivery to any safe world port of the buyer’s choice.
CFR- Cost and Freight, The price includes the cost of the goods, loading,
and freight to the named Destination Port. This does not includeunloading charges.
BCL-Bank Capability Letter of Buyer/Bank Comfort Letter
LOI-Letters of Intent
ICPO-OIL. Irrevocable Corporate Purchase Orderthis document should be on
buyer's letterhead and should be signed and sealed by the buyer and include
buyer's banking details to allow the
supplier to check buyer's financial capability.
FCO-Full Corporate Offer: On receipt of the LOI / ICPO and BCL, the
supplier will send to the buyer a Performa Invoice, sales/ purchasecontract
and/ or FCO(Full Corporate Offer).
NCND(Non-Circumvention and Non- Disclosure)
Non Circumvention Non Disclosure - The purpose of
this document is to protect the agent who wishes to earn a commission for
connecting the Buyer and Supplier. Of course if either of these two wish to
break this agreement, they can for just about any conceivable miniscule error.
It is nearly impossible to prove circumvention since the only way these two
principals can know each other is because the agent passed information that he
should nOt have. And then try and get compensation from two billion dollar
companies that can afford st all until you die. gasoloil.com does not use these
faulty documents in our transactions.
FPA(Free Protection Agreement)
FFDLC-Fully Funded Documentary Letter of Credit
RDLC-Revolving Documentary Letter of Credit
SBLC-Standby Letter of Credit
IMFPA-Irrevocable Master Fee Protection Agreement: Considered as an integral
part of the contract between Paymaster and named Buyer.
BG Bank Guarantee- : byirrevocable, transferable and confirmed
(conditional or unconditional, as per contract terms) Bank Guarantee(BG),
in the total amount of the contract (100%) or in the agreed amount
as per contract, issued or guaranteed by one of the top 25 world banks,
100% payable at sight, at the Seller’s Bank, against presentation of
shipping and/or other contract documents.
CL/C(Confirmed Letter of Credit) A letter of credit, issued by a foreign bank, with
validity confirmed by a First Class (usually US or European) bank. A seller with
CL/C terms is assured of payment even if theforeign buyer or the foreign bank defaults.
DL/C(Documentary Letter of Credit) A document issued by a bank which
guarantees the payment of a buyer's drafts for a specified period and
up to a specified amount. The Documentary Letter of Credit provides a
more secure means of carrying out transactions in import-export trade
than by documentary bills collection (see Bill of Exchange). A letter
of credit when transmitted through a bank, usually in the seller's
country, becomes the means by which the seller obtains payment. The
necessary documents, correctly completed, are presented to a bank by an
agreed date. If the terms of the credit are met, a seller can receive
payment from a bank immediately.
IL/C(Irrevocable Letter of Credit) An Irrevocable Letter of Credit cannot
be amended or cancelled without the consent of the issuing bank, the
confirming bank (if confirmed), and the beneficiary. The payment is
guaranteed by the bank if the credit terms and conditions are fully met
by the beneficiary. The words Irrevocable Documentary Credit or
Irrevocable Credit may be indicated in the L/C. It means that once the
buyer's conditions in the letter have been agreed to by the seller,
they constitute a definite undertaking by the buyer's bank and cannot
be revoked without the seller's agreement.
Revocable Letters of Credit are rarely used as the terms of the credit
can be cancelled or amended by an overseas buyer at any time without
notice to the seller.
specifically designated a Revolving Letter of Credit, the amount
RL/C(Revolving Letter of Credit) When a letter of credit (L/C) is
involved when utilized is automatically reinstated, that is, the amount
becomes available again without issuing another L/C and usually under
the same terms and conditions within a period of time (usually several
months to one year). This saves administration when multiple shipments
are involved.
SL/C(Stand-by Letter of Credit) is a financial guarantee or performance
bond issued by a bank on behalf of a buyer. i.e. a written obligation
of the issuing bank to pay a sum to a beneficiary on behalf of their
customer in the event that the customer himself does not pay the
beneficiary. The SL/C is regulated by the ICC-500 rules.
PB- Performance Bond, This is a type of bank guarantee which is issued
from the Seller to the Buyer. It guarantees that the Seller will meet
the terms of the contract. Normally issued in the amount of 10% to 15%
of the total amount of the contract, a performance bond can be drawn
upon by the Buyer in the event that the Seller breaks the contract and
fails to provide the product which was stipulated in the contract.
RWA- Ready, Willing and Able. This is a document which is issued by the
Buyer's bank. The bank confirms that their client has the sufficient
funds in their possession and is ready, willing and able to engage in
the contract
SWIFT- Society for Worldwide Interbank Financial Telecommunication a global
service which is responsible for facilitating communication between
banks. Most payments are made via SWIFT.
These steps may help in avoiding scams For Russian companies and any company in any other countryThings to do to avoid these scams:1. Always contact your country's embassy in Moscow for help on screening Russiansellers. 2. Ask your embassy to recommend a local lawyer to screen and verify anydocument that you receive from Moscow. 3. Get your lawyer to invite you to Moscow to verify all documents issued by your seller and to visit your seller. 4. Get the seller to move first by issuing PB from reputable Russian Bank with amajor Foreign corresponding bank and Vessel Charter Party Agreementverifiable through your lawyer in Moscow. 5. There is no scam without a Bank. Check the seller's bank listed on the contract. Bank uses their own mail server so if given bank email address shows adifferent mail server then be concerned. Call the bank. Bank officer should use a land line for their phone number not cell phone' 6. Serious and sucessful sellers should not have any need to collect Transneft fees upfront from you once you show then preliminary proof of fund via BCL or soft probe. Only scammers want to see your money first, because their business is to collect these fees,not to sell oil. Furthermore, once you send them one payment, they tell you that they have a quota and that you need to send them more deals before they can accept your Pre-advice LC or issue PB. 7. Even if you ask them to sign a promisory note to return the money in case ofnon-performance, they will do it because you have no way of collecting thatmoney back from them. 8. Do not accept any document from these people unless you have a way ofverifying it independently. They are master forgers for all sort of refinery andgovernment documents. They use a lot of Seller's mandate all of over the worldto bring them business. The Russian mandates are part of the scam but foreignmandates are usually innocent victims who think that they are representing alegitimate Russian seller.Please don't be afraid to share your scam stories !!! Scammers use the samescheme over and over because their victims do not speak out! Your story will help weeding out scammers from the business. It is not just about the money, it is about detecting these scams soon enough to avoid wasting time.The real test is for you to get a copy of their procedure, they all require upfront fee from the buyer for Transneft fee before they issue PB, POP, or show any oil or SGS report or proof of previous deals where that have actually ship any oil to anybody. How to deal successfully and safely in Russia1. Remember, if anybody demands upfront money from you - Deal is Fake! - RunAway! 2. If anybody tells you that price is so good, because he has personal relationship with General Director or President, V-president (school friend) etc. etc. - Deal is Fake! - Run Away! 3. IF anybody demands any "registration fee" according to "government law" ortransportation fee for example for TRANSNEFT or any money before transaction -Deal is Fake! - Run Away! 4. Any respectable seller who has closed deals before should not have any problem paying $30,000 for the so-called transneft fee. The big oil sellers (GAZPROM, ROSNEFT,...) do not even mention these so called fees. 5. All banks used their own Mail servers. So when these scammers list a bankofficer with an email address showing a different mail server - Deal is Fake! - Run Away! 6. If your potential deal is kind of "Too good to be true" - Deal is Fake! - Run Away!The above advice is compliments of : http://www.alees.com/Blacck_list_RussianSellers.pdf Familiarize yourself with the Petroleum Industry in Nigeria to avoid being scammed What does NNPC/JVC stand for and mean? NNPC/JVC stands for- Nigeria National Petroleum Company / Joint Venture Company. NNPC/JVC is often seen on a fraudulent Sales and Purchase Agreement asking for banking information. The NNPC is in joint venture with many companies like Shell, Mobil, Elf, Chevron, Texaco, Agif which means they are doing business with these companies. The NNPC are not in partnership with these companies. The NNPC cannot offer a sales and purchase agreement to any intermediary, company or anyone implying that the companies they are doing business with is part of a sales and purchase agreement. Anyone offering such a sales and purchase agreement does not have oil or even access to it.If the NNPC and Shell or Mobil or any other company are involved in any sales and purchase agreement with a principal buyer (which is very doubtful) it has to be specifically stated on the sales and purchase agreement. No Sales and Purchase Agreement can be generic as being offered on the Internet. How can I figure out the distance by water from the Bonny Port in Nigeria to the Port in the Bahamas? Check out www.distances.com Bottom Line…. It is a fact that there is so much misinformed information going on out there in the international oil trading world that it is hard to know where to begin. There are three important pieces of information we think one needs to be particularly aware of.o Shell Screen Londono NNPC (Nigerian National Petroleum Company)o Lloyds of London 1. Shell Screen London…There is no such thing. There is no website, there is no company. The "Shell Screen" is a complete lie. Regardless of claims, there is no "Shell Screen Company" in London run by Lloyds of London or the NNPC, (Nigerian National Petroleum Company) or anyone else. The "Shell Screen" does not exist, it is a complete lie.2. Lloyds of London… Many misunderstand what Lloyds of London really is. Lloyd's is the world's leading British insurance market place providing specialist insurance services (underwriters) to high risk businesses in over 200* countries and territories. Over 300 years ago Lloyd's started out in Edward Lloyd's Coffee House in the city of London, UK, ( http://www.solarnavigator.net/lloyds_of_london.htm ) as a place where people with exposure to risks, could meet people with capital who, for a price, would agree to insure them. The Society of Lloyds was incorporated by 1871. By the turn of the century the traditional club of marine underwriters had become an international market place for high insurance risks of almost every type. We recommend that you visit the Lloyds web site www.lloyds.com which will provide you with more information of the many services and the Underwriters, that Lloyd's of London provide today. Posting or tracking vessels is not one of their services. Many companies will track vessel for a fee, one of them is http://www.lloydsmiu.com which has no connection with Lloyds of London. http://www.hapag-lloyd.com/en/home.html is a large liner shipping company with over 130 ships, again no connection with the famous Lloyds' of London.3. NNPC (Nigerian National Petroleum Company) (Government owned and operated) NNPC was established in April 1, 1977. The NNPC by law MANAGES the joint venture between the Nigerian federal government and a number of foreign multinational corporations, which include Royal Dutch Shell, ExxonMobil, Agip, Total, Fina, Elf, Chevron, and Texaco. Through collaboration with these companies, the Nigerian government conducts petroleum exploration and development. The NNPC has sole responsibility for upstream (searching for and the recovery and production of crude oil) and downstream (the refining of crude oil, the selling and distribution of natural gas and products derived from crude oil) developments, and is also in control of regulating and supervising the oil industry on behalf of the Nigerian Government.According to the Nigerian constitution, all minerals, gas, and oil the country possesses are legally the property of the Nigerian federal government which is managed by the NNPC. In 1988 the NNPC was commercialized into 12 strategic business units, covering the entire oil industry operations, which is, exploration and production, gas development, refining, distribution, petrochemicals, engineering, and commercial investments. In addition to the 12 business units managed by the NNPC, the oil industry is also regulated by the Department of Petroleum Resources (DPR).The DPR ensures compliance with industry regulations; processes applications for licenses, leases and permits, establishes and enforces environmental regulations The DPR, and NAPIMS (National Petroleum Investment Management Services) one of the 12 strategic business units managed by NNPC, plays a very crucial role in the day to day activities throughout the industry. Requirements for Buying/Selling Marketing Crude Oil. Those who wish to buy and sell Nigerian crude oil must demonstrate their commitment to the oil industry through allocation of adequate resources of capital, equipment and manpower. Those who are eligible to apply for an allocation must be an upstream investor who has acquired an oil prospecting license and has completed a minimum amount of work on the concession.Only local refineries, international refineries and international recognized oil & gas traders may apply for an OPL (Oil Prospecting License.) (OPL is a license granted over an area to a company by the Government for the company to conduct exploration activities. Once a commercial quantity of petroleum or gas is located in an OPL (Oil Prospecting License), an OML (Oil Mining Lease) may be granted to the holder of the OPL to carry out Production activities only in the area covered by the OPL license. Usually, the area covered by a single OML is only a portion of the preexisting OPL.Here's how it works. The players are: The Nigerian Government, (who owns all the oil in Nigeria)NNPC (Nigerian National Petroleum Company) negotiates the signature bonuses with the bidders NPDC (Nigerian Petroleum Development Company) an E&P(Exploration and Production) Unit also partnership with Agip (a retail gas and diesel Co.) DPR (Department of Petroleum Resources) sets the rules and issues the licenses.The Nigerian Government offers block (an assigned area for exploration) to be bid upon by: o An end user who owns a refinery and a sales outlet.o A world recognized oil trader with proof of handling large volume of crude oil in the last three years.o Applicants must have a minimum turnover of no less than $100 million and a net worth of no less than $40 million o The applicant must invest in opportunities that are in the oil industry or gas sector.o Applicants are required to post a $1 million performance guarantee througha first class Nigerian bank in addition to the regular crude oil contract provisions. Each block is assigned an Oil Prospecting License (OPL) number Ex: "OPL 250" "OPL 242" "OPL 244" which participating oil companies can bid upon. If awarded that block and after oil is located an Oil Mining Lease (OML) is granted to the holder of the OPL to carry out production activities.High bidder is not always awarded the winning choice block.Most importantly, and for all those of you who don't know, NNPC does not sell crude oil. They only manage the sales of Nigerian oil. Unscrupulous individuals claiming to be officials or agents, directors, CEO of oil companies have extorted huge sums of money from foreigners for fraudulent crude oil allocation papers. By the same token, there is nothing like a Presidential, Task Force , Ministerial, Diplomatic, International Agents or any other form of special or privileged allocation, which can be peddled by hawkers, companies or anyone. The NNPC has not given any mandate to anyone person or persons to negotiate the sale of Nigerian Crude oil on its behalf.The real allocations of oil products are quickly marketed and contracted out to fulfill existing real demand among major oil companies (Shell, ExxonMobil, Chevron,, Texaco), this demand of the major oil companies outweighs the oil supply of Nigeria.We warn you one more time against having any dealings with anyone claiming to have access to special allocation. If you are contacted with such an offer you can verify it directly with the NNPC Group General Manager at +234 9 234 8200.There is no official or easy entry to this market on a secondary level. In fact, it is astronomically impossible to enter this market as a non major firm on any level…. One can safely regard any BLCO offer as a pure and simple myth. To close….An intermediary needs to learn the proper procedures or will end up suffering consequences. The Reasons: 1. If the proper procedures are not followed the deal will never close. Or even get to the acceptance of the offer from the end buyer. 2. If an intermediary use the flawed LOI/ BCL/ ICPO/ POP/ MPA/ NCND/ PB/ ASWP documents, they are an untrained trader that has been misguided by another unskilled and untrained trader.Note: A trader using the above flawed ambiguous procedures is wasting time on deals that simply cannot be closed. The worst part about this is traders do not understand why it is not working and never gets enough training to correct their mistakes.
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