FOSFA Contract Form No. 11: Oilseeds, CIF Sales, Shipping Documents, Insurance, Discharge, and Arbitration
FOSFA Contract Form No. 11 is a standard contract issued by FOSFA International for the sale and shipment of oilseeds on CIF terms. The version examined here states that it was revised and effective from 1 January 2013. The form establishes a detailed contractual framework governing quantity, quality, specifications, shipment, destination, ship classification, insurance, payment, Bills of Lading (B/Ls), discharge, sampling, pro rata settlement, force majeure, prohibition, insolvency, default, English law, and FOSFA arbitration.
The structure reflects the close connection between an international sale of oilseeds and the maritime carriage required to perform it. The sellers undertake to supply the contractual goods and arrange carriage and insurance to the agreed destination, while the buyers receive defined rights relating to documentary tender, cargo quality, delivery, analysis, weighing, insurance protection, and remedies for non-performance.
The form also addresses circumstances in which shipping documents are unavailable when the ship reaches the destination. In that situation, the buyers can take delivery under a guarantee acceptable to the shipowners, with the sellers remaining responsible for the consequences of failing to provide the required documents. This makes the contract particularly relevant to the interaction between CIF (Cost, Insurance, and Freight) sales, Bills of Lading (B/Ls), banking arrangements, cargo delivery, and maritime security.
The contract is not merely a sale agreement in the narrow sense. It incorporates FOSFA procedures and places considerable importance on notices, documentary timing, nominated experts, market-price settlement, and arbitration. Each clause should therefore be read as part of an integrated commodity-trading system rather than as an isolated contractual provision.
The Parties and Main Commercial Terms
The opening section identifies the sellers, buyers, brokers, contract date, quantity, commodity, packing method, price, destination, shipment period, origin, currency, and payment percentage.
The contract is designed for oilseeds sold either in bags or in bulk. Where the goods are bagged, the seed must be packed in fibre bags suitable for export, excluding synthetic bags. Where the cargo is shipped in bulk, the sellers retain the option to ship up to 15% in bags for stowage purposes.
Any cost of cutting and emptying those bags is for the sellers’ account.
Quantity Is Subject to a 2% Seller’s Tolerance
Clause 1 gives the sellers the option to ship 2% more or less than the contractual quantity.
The variation is settled at the contract price.
If more than one shipment is made, each shipment is treated as a separate contract for performance purposes, but the tolerance applied to the mean contract quantity is not altered merely because delivery is divided among several shipments.
Quality and Condition Are Assessed at Shipment
Clause 2 requires the seed to be of good merchantable quality, in good condition, and in conformity with the agreed description and specifications at the time and place of shipment.
If the seed arrives sea-damaged, otherwise damaged, or out of condition, the contract is not automatically void.
Instead, the goods and any sweepings must be accepted subject to an allowance. The amount of the allowance is determined by agreement or, failing agreement, by arbitration.
The clause therefore favours financial adjustment over automatic rejection where deterioration has occurred after shipment.
Specifications Are Completed for the Particular Commodity
Clause 3 provides space for the parties to state the contractual specifications applicable to the particular oilseed trade.
Those specifications form part of the agreed quality and description requirements and are later relevant to the sampling and analysis procedures contained in the form.
Buyers Can Be Given an Option to Declare the Final Destination
Clause 4 allows the goods to be sold initially for shipment to a stated destination while giving buyers an option to declare one or more alternative destination ports.
The contract can specify a minimum tonnage to be delivered to any one port.
To exercise the option, buyers must declare the destination port or ports to sellers by rapid written communication no later than 1600 hours on the contractual deadline.
The general Notices Clause and Non-Business Days Clause do not apply to this declaration, making the destination option a strict standalone timing requirement.
Shipment Can Be Direct, Indirect, or Through Transhipment
Clause 5 permits direct or indirect shipment, with or without transhipment.
Where transhipment is used, a through Bill of Lading (B/L) must be provided.
The carrying ship must not be a tanker and must be classed at no lower than Lloyd’s 100 A1 or an equivalent classification in another recognised register.
The classification requirement is intended to establish a minimum contractual standard for the carrying ship.
LASH Barge Shipment Is Expressly Permitted
Clause 6 gives sellers the option to ship the goods by LASH barge.
Where this method is used, the Bill of Lading (B/L) is dated when the LASH barge is loaded onto the ocean-going ship.
The insurance must cover the goods from the warehouse at the point where they are loaded aboard the LASH barge through to the warehouse at the discharge port.
The sellers are responsible for the cost of discharging the goods to the LASH barge rail.
CIF Insurance Is a Core Seller Obligation
Clause 7 requires insurance in accordance with the Institute/FOSFA Trades Clauses (C) and the Institute War and Strikes Clauses applicable to FOSFA trades.
The sellers may place the insurance with first-class underwriters or insurance companies domiciled in the United Kingdom, or with insurers that accept a British domicile for legal proceedings and provide a London address for service.
The sellers are not responsible for the solvency of those insurers merely because the cover has been placed in accordance with the contractual requirement.
Claims are payable in the currency of the contract.
Insurance Must Be at Least 2% Above the Invoice Amount
The policies, certificates, or letters of insurance required by the contract must be for no less than 2% above the invoice amount, including freight.
Buyers are also required to accept insurance containing exclusion clauses appearing on the FOSFA Insurance Exclusion Clause List.
This provision ensures that the insured amount is not limited to the exact commercial invoice value.
War Risks Above One-Half Percent Are for Buyers
Clause 8 requires War Risks Insurance to be effected on the terms and conditions approved at the time of shipment under the Institute War Clauses for FOSFA trades.
Any cost of War Risks Insurance exceeding 0.5% is for the buyers’ account.
The applicable rate must not exceed the London rate prevailing at the time of shipment or on the date of the ship’s sailing, depending on the basis adopted by underwriters.
Sellers must notify buyers of the extra expense at the time of declaration under the contract or within 3 business days after the rate is agreed with underwriters, whichever is later.
Failure to give notice invalidates the seller’s claim for the extra expense unless arbitrators consider the delay justifiable.
Declaration of Shipment Must Be Sent Within Ten Days
Clause 9 requires the first sellers to send buyers a declaration stating the ship’s name, the date of the Bills of Lading (B/Ls), and the approximate quantity shipped.
The declaration must be dispatched no later than 10 days after the Bill of Lading (B/L) date.
Intermediate sellers can pass on a declaration after that ten-day period if, from the tenth day onward, each seller in the chain has transmitted the notice with due despatch.
The Bill of Lading Date Is Primary Evidence of Shipment
The date shown on the on-board Bills of Lading (B/Ls) is treated as proof of the date of shipment unless conclusive evidence demonstrates otherwise.
Declarations are made subject to errors and delays in transmission.
A slight variation in the ship’s name does not invalidate a declaration, while a valid declaration cannot be withdrawn without the buyers’ consent.
If the ship arrives before buyers receive the declaration and additional expense results, the sellers bear that cost.
The Declaration of Shipment Clause does not operate where the goods were sold afloat.
Presentation of shipping documents does not itself constitute the required declaration.
The Shipment Period Can Be Extended by Eight Days
Clause 10 applies when the original shipment period does not exceed 31 days.
At the shipper’s request, the period can be extended by no more than 8 additional days.
Notice of the intention to claim the extension must be given to the buyer by rapid written communication no later than the first business day after the final day of the original shipment period.
Successive buyers must pass the notification onward with due despatch.
Shipment Extension Reduces the Contract Price
The seller does not have to specify in the notice how many additional days will ultimately be used.
The contract price is reduced by 0.5% if the extension is 1, 2, 3, or 4 days; by 1% if it is 5 or 6 days; and by 1.5% if it is 7 or 8 days.
If the seller requests the extension but fails to ship during the additional eight days, the original shipment period is treated as having been extended automatically by the full eight days and the contract price is reduced by 1.5%.
FOSFA Member Superintendents Are Normally Mandatory
Clause 11 provides that contractual references to superintendents, surveyors, or representatives mean member superintendents of FOSFA International.
Use of FOSFA member superintendents is mandatory unless the contract, national law, or regulation requires a governmental or other agency that FOSFA does not recognise, or unless no member superintendent is available or reasonably proximate to the port concerned.
FOSFA Member Analysts Are Also the Default Requirement
Clause 12 provides that references to analysts mean analysts who are members of FOSFA International and represented in the Oilseeds Section.
Use of member analysts is mandatory unless the contract or applicable national law or regulation requires governmental or other analysts.
Payment Is Made Against a Complete Documentary Set
Clause 13 governs payment and shipping documents.
The buyers must make payment at the named place, in the percentage stated in the contract, by cash against the complete set of shipping documents.
The form provides alternatives allowing payment on presentation or on, or at the buyers’ option before, arrival of the ship at destination.
Under the arrival-based alternative, payment is due no later than 25 days from the Bill of Lading (B/L) date unless documents are presented later.
If buyers call for the documents before arrival of the ship, payment must be made against the documents as soon as they are presented.
Bank Presentation Costs Depend on Who Chooses the Bank
If documents are presented through a bank, the bank charges are normally for the sellers’ account.
If buyers specifically request presentation through a bank of their own choice and sellers agree, those charges are for the buyers.
For contractual purposes, the relationship between banks is deemed to operate in accordance with ICC URC 522 or any subsequent amendment.
The Shipping Documents Begin with the Commercial Invoice
The documentary set includes a commercial invoice.
It must also contain the full set of clean on-board Bills of Lading (B/Ls), Ship’s Delivery Orders, or other Delivery Orders in negotiable and transferable form.
Other Delivery Orders must be guaranteed by a recognised bank if buyers require such security.
Freight Treatment Depends on the Bill of Lading
If the Bills of Lading (B/Ls) do not show that freight has been paid, the amount of freight is deducted from the invoice amount and paid by buyers on behalf of sellers unless sellers guarantee that freight has already been paid.
Buyers must send a copy of the freight note to sellers for final invoicing.
If freight is payable in a currency different from the contract currency, the final invoice converts the amount using the exchange rate applicable on the day the freight is actually paid.
Charterparty References in the Bill Can Create Seller Responsibility
If the Bills of Lading (B/Ls) refer to a charterparty or another freight-booking document, sellers are responsible for detrimental consequences arising from charterparty or booking provisions that conflict with the sale contract.
If a Bill of Lading (B/L) is signed by someone other than the master, it must be accompanied by a photocopy of written authority from the shipowner or master authorising the signatory.
This requirement links the documentary validity of the Bill of Lading (B/L) directly to evidence that the person signing it had authority to bind the carrier.
Insurance Documents Form Part of the Payment Package
The shipping documents must include the relevant policies, insurance certificates, or letters of insurance in the contract currency.
A letter of insurance must identify the insurer or underwriter and the relevant policy number.
If buyers require it, the letter of insurance must be guaranteed by a recognised bank.
After payment, buyers can request that letters of insurance be replaced with the underlying policies or certificates.
Certificates of Origin and Analysis Are Also Required
The documentary set includes a Certificate of Origin and a Certificate of Analysis.
Buyers must accept photocopies or certified copies of those certificates where they relate to the whole parcel.
Buyers also agree to accept Bills of Lading (B/Ls) containing the Chamber of Shipping War Risk Clause or another recognised War Risk Clause.
Incomplete Sets of Bills of Lading Do Not Automatically Prevent Payment
If documents are presented with an incomplete set of Bills of Lading (B/Ls), buyers must still make payment provided delivery of the missing Bills of Lading (B/Ls) is guaranteed.
If buyers require it, the guarantee must be signed by a recognised bank.
Acceptance of the guarantee does not prejudice the buyers’ contractual rights.
Late Shipping Documents Can Require a Buyer’s Guarantee to the Shipowner
If sellers fail to present the shipping documents by the time the ship arrives at destination, buyers must take delivery under a guarantee acceptable to the shipowners.
If the shipowners require it, that guarantee must be signed by a first-class bank.
Buyers then pay for the shipping documents when those documents are eventually presented.
This mechanism allows physical delivery to proceed despite documentary delay, but it can transfer significant exposure to the buyer until the original documents become available.
Sellers Bear the Extra Cost of Documentary Failure
Reasonable additional expenses caused by the sellers’ failure to provide shipping documents are for the sellers’ account.
This includes the cost of the buyer’s guarantee and extra handling charges arising from the documentary failure.
The amounts are allowed for in the final invoice.
If buyers take delivery under the guarantee, sellers never provide the required shipping documents, and the shipowners call on the guarantee, sellers are responsible for all resulting damages, costs, and consequences.
Buyers must inform sellers immediately if a claim is made against the guarantee, and sellers have the right to be joined in any resulting legal action.
The Guarantee Mechanism Functions as Practical LOI Security
Although the form uses the word “guarantee” in its documentary-delivery machinery, the commercial purpose is similar to that of a discharge Letter of Indemnity (LOI): the party seeking cargo release provides security to the shipowner when the Original Bills of Lading (B/Ls) are unavailable.
The security does not replace the seller’s obligation to provide the contractual documents. It is a temporary mechanism permitting delivery while preserving financial recourse if the documentary failure later causes loss.
Payment Is Effective Only When Cleared Funds Are Received
Payment is not treated as completed merely because a transfer instruction has been sent.
The payee or the payee’s bank must actually receive cleared funds.
Where payment is made by bank transfer, the paying party must instruct its bank on or before the due date and specify a value date no later than the second bank working day after the payment instruction.
Final Invoices and Accounts Must Be Settled Without Delay
Any amounts owing between the parties in respect of final invoices or shipment accounts must be settled without delay unless an arbitration or appeal award provides otherwise.
If settlement does not occur, a dispute is deemed to have arisen and can be referred to arbitration.
Interest Applies to Late Payment
Clause 14 provides that interest is payable where a payment is not made by its due date.
If no specific due date exists, interest becomes payable where there has been unreasonable delay.
The interest rate must be appropriate to the currency involved.
If the parties cannot agree the amount of interest, the dispute is resolved through arbitration.
The Interest Clause does not prevent a party from relying on the Default Clause where failure to pay on time also constitutes a contractual default.
Buyers Can Require a Copy of the Charterparty
Clause 15 provides that if the Bills of Lading (B/Ls) refer to a charterparty, sellers must provide buyers with a copy if requested.
This enables buyers to review incorporated or referenced carriage terms that may affect freight, discharge, demurrage, or other contractual consequences.
Unascertained Goods Can Be Owned Pro Rata
Clause 16 addresses situations where the parcel sold forms an unidentified part of a larger identified quantity of goods of the same description.
No physical separation is required immediately.
Until the contractual parcel is separated and identified, the buyer is treated as a pro rata owner of the larger quantity together with sellers and buyers of the other portions.
Discharge Follows Port Custom or Liner Practice
Clause 17 requires the seed to be discharged in accordance with the custom of the port or, where the Bills of Lading (B/Ls) so provide, according to customary liner practice.
Buyers must take delivery when the ship is ready to discharge.
If sellers tender documents containing discharge or demurrage provisions inconsistent with the contractual arrangement, sellers are responsible for the extra expense caused to buyers.
All working out from the ship’s rail is for the buyers’ account.
Sellers retain the right to superintend the discharge.
The weighing method follows the custom of the discharge port, and the whole shipment must be weighed.
Sampling and Analysis Follow FOSFA Contractual Methods
Clause 18 requires representative samples to be drawn during discharge in accordance with the Federation’s Standard Contractual Methods List.
Buyers’ and sellers’ superintendents jointly draw and seal 5 representative sets of samples for analysis and arbitration purposes.
Buyers or their representatives retain two sets and promptly send one sealed set to a FOSFA member analyst represented in the Oilseeds Section.
The remaining two sealed sets are retained by sellers or their representatives.
Weighted Average Analysis Applies Where Contractual Allowances Exist
Where the contract provides quality allowances, the buyers or their representatives instruct the analyst to analyse each sample and record the weighted average result together with the number of analyses carried out on one certificate.
Where no allowances apply, the buyers’ superintendent mixes the samples into an aggregate sample and a single analysis is performed on that composite sample.
Sellers Can Submit Samples if Buyers Fail to Do So
If buyers fail to submit a sample for analysis, sellers can send one of their retained sets.
The resulting analysis then stands as the first analysis.
The fee for the first analysis is divided equally between buyers and sellers.
Second and Third Analyses Are Available
Either party may request a second or third analysis for one or more individual specifications at its own expense.
The requesting party must notify the other party within 5 business days after receiving the preceding analysis.
It must then arrange for a sealed sample to be sent to another qualifying FOSFA analyst and give the necessary analytical instructions.
The Final Result Depends on the Number of Analyses
If two analyses are carried out, the mean of the two results is final.
If three analyses are performed, the mean of the two results closest to each other is binding.
If the three results do not permit that formula to operate, the mean of all three is taken as final.
The party requesting the analysis must identify the analyst to the other party if asked.
Certificates of analysis must be passed along the contractual chain with due despatch.
A Single Superintendent’s Samples Can Still Be Valid
If one party fails to appoint a superintendent, the samples drawn by the superintendent who is present remain valid for analysis and arbitration.
Seal and label details must be recorded on the analysis certificates.
Analyses are performed according to the Federation’s Standard Contractual Methods List, and samples delivered to the Federation or analysts become their absolute property.
The certificates must bear the official FOSFA International seal.
Receivers Share Commingled Cargo Pro Rata
Clause 19(a) governs receiver-level pro rata settlement.
If the contractual quantity forms part of a larger quantity of the same or a different shipment period and similar quality, physical separation is unnecessary.
Loose collected cargo, damaged goods, sweepings, and any excess or deficiency in delivered quantity are shared pro rata among receivers buying under contracts containing the clause.
A receiver obtaining more or less than its proper share settles with the other receivers in cash using the market price on the last day of discharge.
If the parties cannot agree that market price, it is fixed by arbitration.
Quality Allowances Use the Actually Delivered Weight
If a quality allowance is due to or from buyers under the discharge guarantees, settlement is based on the weight actually delivered rather than a notional pro rata quantity.
Shippers Also Settle Pro Rata Where Cargoes Are Commingled
Clause 19(b) applies where goods shipped by more than one shipper are or become commingled and are destined for one or more discharge ports.
After any receiver-level adjustment, the shippers settle among themselves in proportion to their Bill of Lading (B/L) quantities.
The settlement is made in cash.
If two or more discharge ports are involved, the settlement price is the average of the market prices on the final day of discharge at the respective ports.
Those market prices are fixed by agreement or arbitration.
Pro Rata Obligations Extend Across the Trading Chain
All shippers, sellers, and buyers participating in the larger quantity under contracts containing the clause are treated as having entered into mutual agreements to operate the pro rata system.
They also agree to submit all questions and claims concerning the pro rata settlement to arbitration under the Federation’s Rules of Arbitration and Appeal.
All parties must provide reasonable assistance in establishing the pro rata, and sellers are responsible for settlement by the relevant buyers within a reasonable time.
Export and Import Duties Are Divided Between Sellers and Buyers
Clause 20 places export duties, taxes, levies, and similar charges in the country of origin or shipment port on sellers.
Import duties, taxes, levies, and similar charges at the discharge port or destination country are for buyers.
If the goods qualify for free entry or preferential duty at the named destination, sellers must provide the appropriate Certificate of Origin or other necessary documents in the form valid at the time of shipment.
If sellers fail to provide those documents, they are responsible for additional duty incurred by buyers.
If the final country of destination differs from the contractual destination, sellers must, at the buyers’ request and where possible, provide the appropriate Certificate of Origin for the final destination country.
Notices Must Be Sent by Rapid Written Communication
Clause 21 requires notices to be dispatched by rapid written communication.
All notices are sent subject to errors in transmission.
Intermediate buyers and sellers must pass notices onward with due despatch.
A notice received after 1600 hours on a business day is treated as received on the following business day.
A notice from a broker is valid under the contract.
Non-Business Days Extend Many Deadlines
Clause 22 provides that if a contractual deadline expires on a Saturday, Sunday, public holiday in the relevant country, or a day declared by FOSFA to be a non-business day, the deadline extends to the first business day thereafter.
Business days are treated as ending at 1600 hours Monday to Friday.
The contractual shipment period itself is not extended by this clause.
Odd Months Treat the Middle Day as Belonging to Both Halves
Clause 23 provides that in a month containing an odd number of days, the middle day is treated as falling within both halves of the month.
This avoids uncertainty where shipment periods are expressed by reference to the first or second half of a calendar month.
Force Majeure Can Extend the Shipment Period
Clause 24 applies where shipment is prevented during the last 30 days of the contractual shipment period by an Act of God, strikes, lockouts, riots, civil commotions, fires, or another event falling within force majeure at the loading port or elsewhere that prevents transport of the goods to the port.
The time allowed for shipment is extended to 30 days beyond the end of the preventing cause.
If the original contract shipment period is shorter than 30 days, the extension is limited to the number of days allowed under that original period.
Force Majeure Lasting 60 Days Can Cancel the Contract
If the preventing cause continues for 60 days beyond the contractual shipment period, the contract or the affected unfulfilled portion is cancelled.
Sellers invoking force majeure must notify buyers with due despatch.
Alternative Loading Ports Require Specific Nomination
If goods of a specified origin can be shipped from alternative ports and not all of those ports are affected by the preventing event, sellers can rely on force majeure for a particular port only if that intended loading port was notified to buyers within the contractual timing rules.
The relevant port must normally be nominated before or within 7 days of the occurrence.
If the event begins during the final seven days of the shipment period, the intended loading port must be notified no later than the first business day following the end of the contract shipment period.
Any shipment after the original period is limited to the port or ports so nominated.
Buyers Have No Delay Claim Where Force Majeure Is Properly Established
Buyers cannot claim against sellers for delay or cancellation under the Force Majeure Clause where sellers provide satisfactory supporting evidence if required.
If default occurs after an extension, the contractual default date is correspondingly deferred.
The Prohibition Clause Initially Extends Rather Than Immediately Cancels
Clause 25 applies where, during the shipment period, an export prohibition, governmental executive or legislative measure, blockade, or hostilities restrict export from the country of origin or territory containing the named shipment port.
The restriction is treated as applying to the contract to the extent that it prevents performance.
The affected contract or unfulfilled portion is extended by 30 days.
If shipment remains impossible during that extended period for one of the stated reasons, the contract or the affected unfulfilled part is cancelled.
Sellers must advise buyers with due despatch and provide proof supporting the claim for extension or cancellation if required.
Bankruptcy or Insolvency Produces Immediate Closing Out
Clause 26 defines a broad range of insolvency events, including suspension of payment, inability to meet debts, creditor meetings, voluntary arrangements, official moratorium applications, administration, winding up, appointment of receivers or managers, liquidation steps, interim orders under section 252 of the Insolvency Act 1986, and presentation of a bankruptcy petition.
If one of those events occurs before completion of the contract, the contract is closed immediately.
The Closing-Out Price Can Be Market-Based or Established by Replacement Trade
The contract can be closed at the actual or estimated market price then current for similar goods.
Alternatively, the non-defaulting party can elect to establish the price through a repurchase or resale.
The difference between the contract price and the closing-out price becomes the amount claimable or accountable under the contract.
If a party disputes the repurchase or resale price, the issue goes to arbitration.
If no replacement transaction occurs and the parties cannot agree the closing-out price, a sole arbitrator appointed by the Federation fixes the price, subject to the contractual right of appeal.
A Circle Exists When the Same Goods Return Through the Contract Chain
Clause 27 applies where a seller repurchases from its buyer or a subsequent buyer the same goods or part of those goods.
A circle is then treated as existing for the repurchased quantity, and the ordinary Default Clause does not apply.
For this purpose, the same goods means goods of the same description, country of origin, quality, applicable analysis warranty, destination, and shipment period.
Different currencies do not prevent a circle from existing.
Circle Settlement Uses the Mean Contract Quantity
If goods are not declared, or if they are declared but documents are not presented because the circle has been established, invoices are settled on the mean contract quantity.
Each buyer pays its seller the excess of that seller’s invoice amount over the lowest invoice amount in the circle.
Where contracts in the circle use different currencies, the lowest invoice amount is replaced by the market price on the first business day for contractual shipment.
Each contract is then settled by reference to the difference between the market price and the relevant contract price in the currency of that contract.
If the parties cannot agree the market price, it is determined by a Federation Price Settlement Committee upon application by either party.
Circle Settlements Have Strict Time Limits
Settlement is due no later than 15 consecutive days after the final day for declaration.
If the circle is not established by then, payment is due no later than 7 days after the circle is established.
No circle is recognised if its existence is not established within 45 days after the last day of shipment.
Insolvency Inside a Circle Changes the Settlement Basis
If a party in the circle commits an act covered by the Bankruptcy/Insolvency Clause before payment falls due, the settlement uses the closing-out price from that clause instead of the lowest invoice amount.
Buyers and sellers then settle the difference between the closing-out price and the relevant contract price.
If a Prohibition or Force Majeure claim is operating, the circle settlement date is deferred until the extended shipment period expires.
If the contract is ultimately cancelled under those clauses, the Circle Clause ceases to apply.
The Default Clause Gives the Innocent Party Alternative Remedies
Clause 28 provides that where either party fails to fulfil the contract, the other party can, after notice, cancel the contract or sell or purchase against the defaulter.
The defaulter must compensate the resulting loss.
If the liable party disputes the replacement price, or if neither cancellation nor replacement trade is used, damages are determined by arbitration unless the parties reach an amicable settlement.
Default Damages Are Normally Limited to the Market Difference
Damages against the defaulter are normally limited to the difference between the contract price and the actual or estimated market price on the day of default.
The calculation is based on the mean contract quantity.
However, if arbitrators consider the circumstances sufficiently unusual, they have absolute discretion to calculate damages on a different quantity and/or award additional damages.
The Default Date Can Itself Become an Arbitration Issue
Before the final day for declaration of shipment, a seller can notify the buyer that shipment will not be possible, but the date of that notice does not automatically become the default date unless the buyer agrees.
If default occurs for another reason and the parties cannot agree when it took place, the default date is determined by arbitration.
English Law Governs Construction, Validity, and Performance
Clause 29 provides that the contract is deemed to have been made in England.
Its construction, validity, and performance are governed in all respects by English law.
Any dispute arising out of or in connection with the contract is submitted to arbitration under the Federation’s Rules.
Service of proceedings can be effected by sending them to the party’s last known address while leaving a copy at the Federation’s offices.
Several International Sales Conventions Are Excluded
Clause 30 excludes the Uniform Law on Sales and the Uniform Law on Formation given effect by the Uniform Laws on International Sales Act 1967.
It also excludes the United Nations Convention on Contracts for the International Sale of Goods 1980.
The United Nations Convention on the Limitation Period in the International Sale of Goods 1974 and its 1980 amending Protocol are also excluded.
FOSFA Arbitration Is the Primary Dispute Resolution System
Clause 31 requires every dispute arising out of the contract, including questions of law connected with it, to be referred to arbitration.
The arbitration takes place in London unless the parties agree another location.
The applicable procedural rules are the Rules of Arbitration and Appeal of the Federation of Oils, Seeds and Fats Associations Limited in force on the contract date.
The parties are deemed to know and accept those Rules.
An Arbitration Award Is a Condition Precedent to Court Proceedings
Neither party, nor a person claiming through either of them, can bring substantive legal proceedings against the other regarding a contractual dispute until the matter has first been determined by the arbitrators, umpire, or Board of Appeal under the Federation’s Rules.
Obtaining the arbitral award is expressly made a condition precedent to later court proceedings concerning the dispute.
This gives the FOSFA arbitration system priority over ordinary litigation for disputes falling within the contractual clause.
FOSFA Contract Form No. 11 and the Documentary Sale Structure
The form places Bills of Lading (B/Ls) at the centre of the CIF (Cost, Insurance, and Freight) sale machinery.
The Bill of Lading (B/L) date is used to prove shipment, determine the declaration timetable, and regulate documentary payment.
The Bill of Lading (B/L) also identifies freight arrangements and may incorporate or refer to charterparty terms that sellers must ensure do not prejudice the buyers’ contractual position.
Where the original documents fail to arrive in time, the guarantee mechanism allows the buyers to obtain cargo delivery without permanently relieving sellers of their documentary obligations.
Insurance, Documents, and Cargo Delivery Operate as One Commercial System
The contract requires the sellers to provide both carriage documents and insurance protection because both are essential elements of the CIF (Cost, Insurance, and Freight) structure created by the form.
Payment is linked to presentation of the documentary package, while physical delivery can continue under security if documentary delay would otherwise prevent the cargo from being released.
The buyers’ guarantee to the shipowner therefore operates as an emergency bridge between physical arrival and documentary completion.
Notice Discipline Is Essential Under FOSFA Form No. 11
The contract contains numerous short and specific notice periods.
Destination declarations can be due by 1600 hours on a fixed contractual day. Shipment declarations must generally be sent within ten days of the Bill of Lading (B/L) date. War-risk premium notices can be due within three business days. Shipment extensions must be claimed immediately after the original period expires. Second or third analyses must be requested within five business days. Force majeure port nominations can operate on seven-day deadlines.
A party using the form therefore needs an effective internal system for monitoring shipment dates, receipt times, documentary deadlines, and onward transmission through any string of buyers and sellers.
Market Price Is Used Repeatedly to Convert Physical Problems into Financial Settlements
The form uses market price as an important settlement tool in several clauses.
Receiver and shipper pro rata differences are settled using market prices at discharge. Insolvency is handled through closing-out prices. Circle settlements can use market prices where several currencies are involved. Default damages ordinarily compare the contract price with the market price on the day of default.
This structure allows disputes over incomplete physical performance to be translated into monetary adjustments capable of determination through FOSFA arbitration.
FOSFA Contract Form No. 11: The Practical Commercial Structure
FOSFA Contract Form No. 11 provides a comprehensive framework for international oilseed sales on CIF (Cost, Insurance, and Freight) terms. It combines the sale of goods with the maritime, documentary, insurance, analytical, and dispute-resolution arrangements required to move bulk or bagged oilseeds through international trade.
The quantity clause gives sellers a 2% operational tolerance. Quality disputes generally result in allowances rather than automatic avoidance of the contract. Buyers can be given destination options, while the shipment and classification clauses establish minimum requirements for the carrying ship and allow transhipment where a through Bill of Lading (B/L) is provided.
Insurance is a central seller obligation and must normally exceed the invoice amount by 2%. The payment clause defines a substantial documentary package including the commercial invoice, clean on-board Bills of Lading (B/Ls), insurance documents, Certificate of Origin, and Certificate of Analysis. If those documents are unavailable when the ship arrives, buyers may have to obtain delivery under a bank-supported guarantee acceptable to the shipowners, with sellers remaining responsible for the resulting costs and consequences of documentary failure.
The form also creates disciplined procedures for superintendence, analysis, pro rata settlement, duties, notices, force majeure, prohibition, insolvency, circles, and default. Strict deadlines and 1600-hour cut-offs appear repeatedly, making prompt notice management essential.
Finally, the contract is governed by English law and places dispute resolution within the FOSFA arbitration system. The Uniform Laws, the United Nations Convention on Contracts for the International Sale of Goods 1980, and the United Nations Convention on the Limitation Period in the International Sale of Goods are expressly excluded. The result is a specialised contractual regime in which FOSFA wording, FOSFA procedural rules, documentary performance, and English law together govern the parties’ commercial relationship.