Contracts: writing terms that don't burn you

The sale contract is where you lock down everything that can go wrong. Vague contracts cause disputes; precise contracts make execution mechanical. An operator reads a contract asking 'what happens if…?' at every line.

What a solid commodity contract pins down

• Commodity & specification — exact grade, quality parameters, and tolerances, with the test method named.
• Quantity — amount, tolerance (e.g. +/- 10%), and at whose option.
• Price & pricing basis — fixed, or formula-linked to an index with a defined quotational period.
• Incoterm & named place — including the edition (e.g. 'CIF Rotterdam, Incoterms 2020').
• Delivery / shipment window — laycan, and consequences of missing it.
• Payment terms — LC, collection, prepayment, with timing and document list.
• Inspection — who appoints the inspector, where, and whose certificate is binding.
• Title & risk transfer — usually tied to the Incoterm and to payment.
• Force majeure, governing law and dispute resolution — which law applies and where disputes are arbitrated (e.g. GAFTA, FOSFA, LMAA).