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How is a contract written?
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| Once the seller and buyer reach agreement on issues like price, grain quality, payment, credit, transportation and delivery, the agreement is usually written up by the seller in a sales agreement or contract of sale form that varies with the type of transaction. For example, the North American Export Grain Association has a widely used four page, standard use contract for FOB purchases of bulk grain and oilseeds called the NAEGA standard contract No. 2. It has 26 separate clauses delineating the various aspects of a grain purchase.
Other forms have been developed such as the Grain and Feed Trade Association of London (GAFTA) contract for C&F and CIF grain transactions, and the FOSFA standardized contract for CIF and C&F sales of soybeans.
Elements of a good contract
- Parties (buyer and seller)
- Commodity
- Quality and grade
- Price and method of payment
- Time, place and method of delivery
- Shipping documents required for Payment (L/C)
- Default Factors
- Remedies for injured parties
- Forum for disputes
Suggested contracts, developed by NAEGA:
| Free On Board Export Contract U.S.A./Canada No. 2
NAEGA F.O.B. Contract No. 2 |
| Load Rate Guaranty
Addendum No. 1 to NAEGA F.O.B Contract No. 2
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| Arbitration
Addendum No. 2 to NAEGA F.O.B. Contract No. 2, also applies to
Loading Rate Guaranty Addendum No. 1 to the NAEGA 2 |
GAFTA Contracts:
Click here to access more than 80 GAFTA contracts covering CIF, FOB, and delivered terms. |
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