Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

Changes In Contract Rules To Affect GAFTA members

Nov 17 2003, 00:00 IST
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Several Indian exporters who are members of the UK-based Grain and Feed Trade Association (GAFTA) will have to adjust themselves to the new changes in contracts and arbitrations rules recently adopted by the organisation. These changes in contracts and arbitration rules comes into effect from January 1, 2004.

More than 80 per cent of the world in cereals and a significant proportion of trade in animal feeds move on the terms of GAFTA contracts. GAFTA has more than 900 members in 80 countries, including India. GAFTA membership is diverse including importers, exporters, brokers, dealers, manufacturers, processors, millers, brewers, distillers, analysts, superintendents, forwarding agents, arbitrators and solicitors.

This diverse membership helps GAFTA to resolve many trade issues relating to contracts and arbritration, quality standards, quantity, price, delivery period, insurance, sampling and analysis, default, problems and exceptional circumstances and other trade related issues. GAFTA’s services in trade are designed to protect the interests of its members.

GAFTA deals with trading terms like cost, insurance and freight (CIF), free on board (FoB), Tale Quale which means that the buyer agrees to accept the goods as they come provided they are shipped initially in good condition and Rye terms which means that the condition of goods on arrival is guaranteed by the seller.

According to new changes for difference in contracted quantity shipped under CIF, the tolerance will be at the seller’s option while under FoB it will be at the buyer’s option. If the sale of goods is on a certificate final terms as to quality then the buyer may not be able to reject goods. Whilst he may only be able to claim allowances for deficiency in quality he may nevertheless be able to reject the goods on the basis of misdescription if the crop was old and not new.

GAFTA rules says that it is very common to see reciprocal allowances or non-reciprocal allowances in a contract of sale setting out various monetary price adjustments that will apply should the product not meet its basic quality specifications like clause 5 of GAFTA 100 unless the parties have agreed to the provision for final certificates set out in lines 61/62 of GAFTA 100.

It is most important therefore that when agreeing to a sale as per GAFTA 64 terms and the parties should ensure that they delete which option is inappropriate. If they agree that the sale is on certificate final terms as to quality in clause 5

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