CIF Oil Standard Contract 2016

Hydrocarbon management
HM 81
Model general terms and conditions for cost,

insurance and freight (CIF) and cost and freight
(CFR) sale and purchase of crude oil
2nd edition
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HM 81 MODEL GENERAL TERMS AND CONDITIONS FOR COST,
INSURANCE AND FREIGHT (CIF) AND COST AND FREIGHT (CFR)
SALE AND PURCHASE OF CRUDE OIL
2nd edition
July 2016
Published by
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+44 (0)207 467 7100
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HM 81 MODEL GENERAL TERMS AND CONDITIONS FOR COST, INSURANCE AND FREIGHT (CIF)
AND COST AND FREIGHT (CFR) SALE AND PURCHASE OF CRUDE OIL
Contents
Pages
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1 Applicability of these general terms and conditions . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2 Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3 Title and risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4 Quantity and quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

4.1 The extent of the seller’s obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.2 Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Part cargo lots delivered CIF or CFR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.4 Quantity and quality claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5 Price and payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

5.1 Price and invoicing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.2 Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Payment documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.4 Letter of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.5 Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.6 Non-compliance with payment terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.7 Other payment terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6 Vessel and discharge terminal obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

6.1 The performing vessel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.2 Discharge terminal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7 Operational provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1 Vessel nominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2 Vessel rejection or acceptance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.3 Vessel’s estimated time of arrival (ETA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.4 Shifting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.5 Laytime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.6 Demurrage rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.7 Exceptions to laytime and demurrage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
7.8 Demurrage claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8 Additional provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10 War and ice clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11 Alternative or additional discharge terminal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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Contents cont...
Pages
12 Lightering and STS operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13 Crude oil washing/stripping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
14 Non-performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
14.1 Force majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
14.2 Default and termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
15 Taxes and licences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

15.1 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
15.2 Licences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
16 Limitation of liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
17 Notices and communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
18 Recording, retention and monitoring of communications . . . . . . . . . . . . . . . . . . . . . 36
19 Destination and sanctions compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

19.1 Destination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
19.2 Trade controls and boycotts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
19.3 Facilitation payments and anti-corruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
20 Representations, amendments and waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

20.1 No representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
20.2 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
20.3 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
21 Rights, powers and remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
22 Interpretative provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
23 Health, safety and environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
24 Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
25 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
26 Governing law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
27 Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
28 Electronic documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Annexes
Annex A Glossary of terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Annex B Confirmation of CIF or CFR sale agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
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FOREWORD
The Hydrocarbon Management Committee (HMC) of the Energy Institute (EI) produces and maintains
documents covering various aspects of hydrocarbon management. These are produced through a
number of sub committees and sister committees.
The General Terms and Conditions Hydrocarbon Trading Committee focuses on development of
standard documents for the trading sector. These documents are voluntary but their adoption should
help to reduce uncertainty and the need for individual negotiation.
It is intended that these Model General Terms and Conditions will evolve to meet the changing needs
of industry. To this end it is important that industry users provide feedback on experiences with the
use of these terms. This information can then be taken into account when the Committee reviews
and revises this document.
Users are invited to send comments or details of experience with the use of this document to:
Technical Manager
Hydrocarbon Management
Energy Institute
61 New Cavendish Street
London
W1G 7AR
e: technical@energyinst.org
+44 (0)207 467 7100
ACKNOWLEDGEMENTS
The EI wishes to acknowledge the contribution of all members of the General Terms and Conditions
Hydrocarbon Trading Committee to the preparation of this document and in particular the contribution
of Reed Smith LLP who provided valuable assistance with both drafting and legal input.
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INTRODUCTION
BACKGROUND
Many of the major international oil companies produce their own in-house General Terms and
Conditions (GTCs) for physical oil trading and these can vary considerably in their approach
to key contract issues. Trading companies and other parties normally do not develop their
own terms and, depending on the particular trade, will either accept the in-house terms
proposed by their counterparty, if they have them, possibly with negotiation and modification
of various terms, or will use a modified set of terms based on one of the in-house sets, again,
frequently with negotiated changes.
Variations in terms can cause significant difficulties when back-to-back contracts are involved.
In this second edition the insurance deductible has been deleted from clause 9.3.
Sister documents are:
−− HM 80 Model general terms and conditions for free on board (FOB) sale and
purchase of crude oil
−− HM 82 Model general terms and conditions for free on board (FOB) sale and
purchase of petroleum products
−− HM 83 Model general terms and conditions for cost, insurance and freight
(CIF), cost and freight (CFR) and delivery at place (DAP) sale and purchase of
petroleum products
PURPOSE OF THESE MODEL TERMS
These Model General Terms and Conditions have been developed with the intent of providing
a commonly known, commercially neutral set of contract terms which parties may use on a
voluntary basis.
Use of these terms will hopefully facilitate contract certainty for traders operating in this
market and will reduce transaction costs which arise if contracts have to be negotiated for
individual deals.
Wider adoption of these terms will also facilitate moves towards electronic trading.
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1 APPLICABILITY OF THESE GENERAL TERMS AND

CONDITIONS
1.1 These general terms and conditions and the schedules hereto (referred to collectively as
these General Terms and Conditions), shall apply to all CIF or CFR contracts into which they
are incorporated by reference, whether such contracts are concluded orally, in writing or
otherwise. Any such contract shall herein be referred to as an Agreement.
1.2 These General Terms and Conditions are intended to be supplemented by a Confirmation.
The absence of a Confirmation or a signature thereto shall affect neither the validity of an
Agreement nor the applicability of these General Terms and Conditions to it.
1.3 The Agreement contains the entire agreement between the Seller and the Buyer and
supersedes all prior representations, agreements, undertakings, whether oral or written, in
connection with the matters which are the subject of the Agreement.
1.4 In the case of any conflict, ambiguity or inconsistency between these General Terms and
Conditions and a Confirmation, the Confirmation shall prevail.
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2 DELIVERY
2.1 The Seller shall deliver the Oil to the Buyer at the Loading Terminal, to be shipped by the
Seller in bulk CIF or CFR as the case may be to the Discharge Terminal.
2.2 Where a Loading Period is specified in the Agreement, this shall be the day or range of
days within which the Performing Vessel shall tender NOR. The Seller shall have sufficient
Oil available to load the Performing Vessel continuously and shall complete loading of the
Performing Vessel as soon as reasonably practicable, even if this means loading is completed
after the end of the Loading Period.
2.3
2.3.1 Where a Loading Period is specified in the Agreement, if the Seller also expressly or implicitly
provides the Buyer with a date or range of dates within which the Performing Vessel shall
arrive and tender NOR at the Discharge Terminal and such dates are not stated to be
guaranteed in the Confirmation (Indicative Discharge Date(s)) these shall be indicative only,
made by the Seller as an honest assessment without guarantee. The Seller shall not assume
any responsibility for the delivery of the Oil at the Discharge Terminal within such Indicative
Discharge Date(s).
2.3.2 The commencement of Laytime shall be as set out in 7.5.2, except where it is specified in
the Agreement that the Indicative Discharge Date(s) are to be used for the purposes of
calculating Laytime and demurrage, in which case 7.5.4 – 7.5.6 shall apply.
2.4 Where no Loading Period is specified in the Agreement and the Seller expressly or implicitly
provides the Buyer with Indicative Discharge Date(s), and such dates are not stated to
be guaranteed in the Confirmation, then the Seller shall not be in breach of and shall be
deemed to have fulfilled its obligations with regard to any delivery, providing the loading
and carriage of the relevant Cargo is on terms (including, with regard to the place of loading,
the time of loading and the expected/customary voyage time), consistent with the arrival
at the Discharge Terminal on the Indicative Discharge Date(s), safe navigation and weather
permitting. The commencement of Laytime shall be as set out in 7.5.4 – 7.5.6.
2.5 Whether or not a Loading Period is specified in the Agreement, if the Seller provides the
Buyer with a date or range of dates within which the Performing Vessel shall arrive and
tender NOR at the Discharge Terminal and such dates are stated to be guaranteed in the
Confirmation (‘Guaranteed Discharge Date(s)’) the commencement of Laytime shall be as set
out in 7.5.7.
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3 TITLE AND RISK
3.1 Notwithstanding any right of the Seller to retain the shipping documents until payment,
delivery of the Oil shall be completed and title to and risk in the Oil shall pass to the Buyer
when the Oil passes the manifold flange connecting the delivery terminal’s hose and the
Performing Vessel’s intake manifold at the Loading Port.
3.2 If the Oil is sold or nominated to be sold afloat, then risk in the Oil shall pass to the Buyer
as from the time the Oil passes the flange connection between the delivery hose and the
permanent hose connection of the Performing Vessel at the Loading Port, and title in the Oil
shall pass to the Buyer upon acceptance of the nomination of the Performing Vessel by the
Buyer.
3.3 In case of delivery of a part Cargo lot where the Oil deliverable hereunder is not identifiable
or ascertainable on board the Performing Vessel separately from oil destined for receivers
other than the Buyer, risk and title in the Oil shall pass to the Buyer in accordance with 3.1
and 3.2, and the Buyer shall be an owner in common of the bulk with the other receivers,
each owning a proportion of the bulk represented by their respective bills of lading to the
total quantity recorded on all of the bills of lading issued in respect of the bulk.
3.4 The Seller warrants that it will convey to the Buyer full marketable title to the Oil free and
clear of any lien or encumbrance and that at the time of such conveyance it shall have the
full right and authority to transfer such title to the Buyer and to effect delivery of the Oil.
10
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4 QUANTITY AND QUALITY
4.1 THE EXTENT OF THE SELLER’S OBLIGATION
4.1.1 The Oil at the time of loading shall be of the quantity, quality and specification expressly set
out in the Agreement.
4.1.2 The Seller’s obligations with regard to the quantity, quality, specification and description
of the Oil shall be limited to the provisions expressly set out in the Agreement. All implied
conditions, warranties and other terms as to the quantity, quality, description and specification
of the Oil (statutory or otherwise), including without limitation as to the condition, quality,
merchantability, fitness and suitability for any purpose (whether or not specific and/or known
to the Seller), are excluded to the extent permissible by law.
4.2 DETERMINATION
4.2.1 Unless otherwise agreed by the parties in writing, the quantity and quality of each Cargo
shall be determined at the Loading Terminal in accordance with Standard Practices at the
time of loading and the provisions of this section.
4.2.2
a) The determination of quality and quantity and preparation of certificates shall be
carried out by:
i. the Loading Port’s own qualified representative (the Terminal
Representative); or, where the use of a Terminal Representative is not part
of Standard Practices at the Loading Port,
ii. an independent inspector (the Inspector) jointly agreed upon, appointed
and instructed by the Buyer and Seller, who shall use their best endeavours
to reach an agreement regarding the appointment.
b) The costs of inspection and certification shall be borne:
i. by the parties in equal shares if the Inspector is appointed pursuant to
4.2.2(a) (ii), or
ii. by the Seller in all other circumstances.
c) Subject to Standard Practices the quantity of the Cargo delivered shall be determined
by any one of the following methods (and in the following order, subject to the
capability of the Loading Port): Loading Port’s calibrated meters; or static shore tank
measurement; or the Performing Vessel’s received figures corrected with Performing
Vessel’s experience factor. A full deduction shall be made for free water and sediment
and water as determined by Standard Practices at the time of loading.
d) The quality of the Cargo delivered shall be determined based upon an analysis of a
representative sample of the Cargo using Standard Practices at the time of loading.
4.2.3 Either party may, at their own expense, have an authorised representative present at the
Loading Terminal to observe loading, sampling and determinations subject to 4.2.7.
4.2.4 The Inspector or Terminal Representative shall issue quality and quantity certificates and
make available to both parties copies of his findings as soon as reasonably practicable after
completion of loading. The certificates shall:
11
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a) record the determinations made in respect of the quantity (both gross and net) and
quality of the Cargo (respectively) in accordance with 4.2.2;
b) be issued in accordance with Standard Practices at the time of loading;
c) record that the Inspector, where appointed, observed or himself undertook the
taking of samples and the analysis of such samples, and
d) be issued and signed by the Inspector or countersigned by the Inspector, where
appointed.
4.2.5 In the event that an Inspector observed but did not undertake the taking or the analysis of
samples, then the certificate of quantity and quality issued or countersigned by him must
expressly reflect this.
4.2.6 The certificates issued in accordance with 4.2.4 shall, save in cases of fraud or manifest error,
be final, conclusive and binding upon both parties as to quality and quantity for invoicing
purposes only, without prejudice to the Buyer’s right to bring quality or quantity claims.
4.2.7 The Seller shall use all reasonable endeavours to procure that the Inspector and the authorised
representative appointed pursuant to 4.2.3 have full access to the facilities at the Loading
Terminal necessary to perform their duties.
4.2.8 The Seller shall use all reasonable endeavours to ensure that the bill of lading reflects the
quantity referred to in the quantity certificate and is issued and/or signed, and/or released
by the carrier promptly upon the shipper’s request in the usual or customary terms. For the
avoidance of doubt, any discrepancy between the bill of lading quantity and the quantity
stated in the quantity certificate shall not affect any of the Buyer’s obligations under the
Agreement, including but not limited to the Buyer’s obligation to pay the price.
4.2.9 Notwithstanding any other provision of the Agreement if quality and quantity are determined
by reference to samples drawn or measurements taken at any point prior to the Performing
Vessel’s manifold, the Seller shall be liable for any deterioration in quality, contamination or
shortage occurring between the sampling or measurement point and the Performing Vessel’s
intake manifold.
4.2.10 Where the Inspector is instructed by the parties, the Inspector shall be instructed to retain
a second set of sealed samples as referenced in 4.2.2(d) for a period of not less than ninety
(90) days from the bill of lading date. In the event of a dispute between the Buyer and Seller
as to the quality of the Oil delivered, the Inspector shall be instructed to retain samples until
the dispute has been resolved as notified by both parties.
4.2.11 Where no Inspector is appointed the Seller shall use reasonable endeavours to ensure that a
second set of sealed samples is retained at the Loading Terminal for a period of not less than
ninety (90) days from the bill of lading date.
4.2.12 Notwithstanding the provisions of this 4.2, if an independent Inspector has already been
appointed by the Seller or any third party in respect of the shipment prior to the nomination
of such shipment by the Seller to the Buyer pursuant to 7.1 or if such inspection has already
been carried out, then both parties shall be bound by the results of such measurement of
quality, sampling and analysis thereof as carried out by such independent Inspector, provided
always that the certificates of quality and quantity (or such other equivalent documents
as may be issued at the Loading Terminal), of the Oil comprising the Cargo are issued in
accordance with 4.2.4.
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4.3 PART CARGO LOTS DELIVERED CIF OR CFR
Where delivery is made as an unsegregated part Cargo lot to the Buyer and a third party or
parties, the quantity determined in accordance with the foregoing shall be adjusted so that,
following completion of discharge of the relevant part Cargo lots, the Buyer and such third
party or parties shall each be allocated a percentage of the total loaded quantity equal to
that percentage of the total outturn quantity which was discharged at its Discharge Terminal.
4.4 QUANTITY AND QUALITY CLAIMS
4.4.1 Unless the Buyer has notified the Seller of any claim relating to the quality or quantity of any
Cargo in writing, together with supporting documentation and reasonable details of the
facts on which the claim is based, within sixty (60) days of date of completion of discharge
or ninety (90) days of the date of the relevant bill of lading, whichever is earlier, the Buyer’s
claim shall be treated as waived and absolutely barred.
4.4.2 Notwithstanding the above, no claim shall be admitted in respect of any deficiency of quantity
where the difference between the loaded and discharged quantity is zero point five per cent
(0,5 %) of the loaded quantity or less.
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5 PRICE AND PAYMENT
5.1 PRICE AND INVOICING
5.1.1 The Buyer shall pay the price for each Cargo delivered as specified in the Seller’s commercial
invoice.
5.1.2 Subject to 4.3, the Seller’s commercial invoice shall be completed on the basis of the price
specified in or calculated in accordance with the Agreement multiplied by the quantity
specified in the certificate of quantity issued by the Inspector or Terminal Representative
pursuant to 4.2.4.
5.1.3 If the pricing mechanism does not allow the Seller’s commercial invoice to be completed
before the Payment Due Date or before the presentation of the Payment Documents:
a) The Buyer shall pay a provisional price against a provisional commercial invoice
prepared by the Seller based on the latest information available to the Seller on the
date of presentation of its invoice which shall be replaced by the Seller as soon as
possible with a final commercial invoice.
b) The Buyer and Seller shall account to each other forthwith and in no event later than
three (3) days after receipt by the Buyer of Seller’s final commercial invoice for any
difference between the price paid against the provisional commercial invoice and the
price specified in the final commercial invoice.
c) During the period between payment of the provisional invoice and issuance of the
final commercial invoice no interest shall accrue on any balance which becomes
payable. However, interest shall accrue upon any sums not paid in accordance with
(b) above.
5.2 PAYMENT
5.2.1 Except as otherwise provided herein or by separate written agreement of the parties, all sums
due under the Agreement shall be paid in US dollars by telegraphic transfer without offset,
deduction or counter-claim to the bank account specified in the relevant invoice.
5.2.2 The Buyer shall effect payment of the price specified in the Seller’s commercial invoice (or
provisional invoice as the case may be), as follows:
a) if the Agreement provides for payment by Letter of Credit (or if no payment method
is specified), payment shall be effected by means of Letter of Credit in accordance
with 5.4; otherwise,
b) payment shall be effected on or before the Payment Due Date against presentation
of the Payment Documents.
5.2.3 In the event that the Payment Due Date is not specified in the Confirmation, the Payment
Due Date shall be thirty (30) days after the bill of lading date in respect of the Cargo, where
the bill of lading date is day zero.
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5.3 PAYMENT DOCUMENTS
5.3.1 Subject to 5.3.2, the Payment Documents in respect of each Cargo shall be the following
documents, any of which may be presented by way of an eDoc if the parties have expressly
agreed in writing in accordance with 28.1 that the relevant document may be issued, signed
and transmitted electronically:
a) Seller’s commercial invoice (telex or fax copies shall be acceptable);
b) a full set (three originals and three non-negotiable copies) of clean, shipped on board
bills of lading issued or endorsed to the order of the Buyer or, if agreed between the
parties in writing, the Buyer’s nominated bank;
c) original certificates of quantity and quality issued in accordance with the Agreement;
d) original certificate of origin issued by the Chamber of Commerce or competent
authority at the place of origin of the Oil, if mutually agreed, and
e) where so requested under 9.4, an original certificate of insurance.
5.3.2 In the event that any of the Payment Documents is not available on the date of the Seller’s
presentation to the Buyer, the Payment Documents shall comprise an original or fax copy of
the Seller’s commercial invoice and a letter of indemnity (LOI) issued by the Seller in a form
acceptable to the Buyer.
5.3.3 If the Agreement provides for the LOI to be endorsed and countersigned by a bank, such
endorsement and countersignature shall confirm that the bank assumes joint and several
liability under the LOI. The bank must be acceptable to the Buyer.
5.3.4 Any discrepancy in the Payment Documents presented by the Seller to the Buyer shall
be notified promptly by the Buyer to the Seller upon receipt of the Payment Documents,
provided always that a failure to notify in accordance with this provision shall not include,
constitute or be deemed a waiver in respect of such defect.
5.4 LETTER OF CREDIT
5.4.1 Any Letter of Credit required pursuant to the terms of the Agreement shall be in a form
acceptable to the Seller and shall, unless otherwise expressly agreed in writing:
a) be issued and advised or confirmed (as specified in the Agreement) by a first class
international bank acceptable to the Seller;
b) cover one hundred percent (100 %) of the contractual mean value of the Cargo at
the price specified in the Agreement plus either the additional percentage agreed by
the parties and specified in the Confirmation or, if no such additional percentage is
specified in the Confirmation, fifteen percent (15 %), and shall include a term that the
value of the Letter of Credit shall automatically escalate or de-escalate in accordance
with the quantity delivered and the price as specified in the Agreement, even above
or below the stated limit in the Letter of Credit, without further amendment;
c) be issued and, if applicable, advised or confirmed in writing and delivered to the
Seller by no later than the date specified in the Agreement or, in the absence of a
specified date, by no later than ten (10) days prior to the first day of the Loading
Period;
d) in respect of a Documentary Credit, provide for presentation of and respond to the
Payment Documents, and
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e) be valid for shipment taking place over a period up to three (3) days before and
seven (7) days after the Loading Period. If for any reason shipment will not take place
within such a period, the Buyer shall promptly amend the shipment period specified
in the Letter of Credit or provide a new Letter of Credit in terms acceptable to the
Seller.
5.4.2 Unless otherwise expressly agreed, all fees, commissions, costs, expenses and charges in
respect of the Letter of Credit shall be for the Buyer’s account.
5.4.3 The Letter of Credit shall take effect in accordance with its terms, but such terms shall not
alter, add to or in any way affect the terms of the Agreement.
5.4.4 For the avoidance of doubt, if the quantity of the Oil or any of the Cargo is expressed in the
Agreement as a fixed amount with a tolerance margin in favour of the Buyer or the Seller,
the Documentary Credit shall permit payment to be made upon presentation of Payment
Documents showing a quantity within the contractual tolerance margin.
5.4.5 If the final price is not ascertainable on the date by which the Letter of Credit is to be
established and furnished to the Seller, the Letter of Credit shall be sufficient to cover the
value of the maximum quantity of the Cargo to be delivered plus either the additional
percentage agreed by the parties and specified in the Confirmation or, if no such additional
percentage is specified in the Confirmation, fifteen percent (15 %), as calculated by the Seller
by reference to such pricing information as is available to the Seller at that time.
5.5 SECURITY
5.5.1 Notwithstanding the fact that no Letter of Credit has been demanded by the Seller pursuant
to 5.2.2(a), the Seller may, in its sole and absolute discretion, require by notice in writing to
the Buyer that the Buyer provide security for payment of the price by means of:
a) a Documentary Credit in accordance with 5.4; or
b) a standby credit which shall be in a form acceptable to the Seller and which shall
comply with the provisions of 5.4.1(a) and (b); or
c) payment in advance.
Save that the Buyer may elect in its sole discretion in which of the above forms it will provide
such security to the Seller.
5.5.2 Unless otherwise agreed, any security required pursuant to 5.5.1 shall be received by the
Seller by no later than ten (10) days prior to the first day of the Loading Period or two (2)
Banking Days after the Seller’s written notice, whichever is later.
5.6 NON-COMPLIANCE WITH PAYMENT TERMS
5.6.1 If either party (the Paying Party) fails to pay in full any sums on the due date for payment, the
other party shall have the right to charge, and the Paying Party shall pay, interest on a daily
basis at the annual rate agreed between the parties and specified in the Confirmation on any
unpaid amount from the due date for payment to the date on which payment is received in
full in cleared funds.
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5.6.2 The provisions of 5.6.1 shall not be construed as an indication of any willingness on the
part of the either party to provide extended credit as a matter of course and shall be strictly
without prejudice to any other rights or remedies the parties may have under the Agreement
and/or at law.
5.7 OTHER PAYMENT TERMS
5.7.1 If the Payment Due Date falls:

a) on a Saturday or New York banking holiday other than a Monday, the Payment Due
Date shall be the preceding Banking Day; or
b) on a Sunday or Monday New York banking holiday, the Payment Due Date shall be
the following Banking Day.
5.7.2 Each party warrants and represents that:

a) any payment instructions given and any payments made by such party pursuant to
the Agreement shall be duly authorised by such party in good faith, shall comply
with all applicable laws, rules and regulations (including without limitation any tax
and currency regulations), and shall not create any liability for the paying or receiving
party under any such laws, rules or regulations, and
b) it has all necessary authorities, licences and approvals to make such payments and/or
give such payment instructions.
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6 VESSEL AND DISCHARGE TERMINAL OBLIGATIONS
6.1 THE PERFORMING VESSEL
6.1.1 The Seller shall nominate a Performing Vessel that meets the following criteria:
a) the Performing Vessel shall be owned or demise chartered by a member of ITOPF;
b) the owners of the Performing Vessel shall maintain and carry on board all relevant
certificates and adequate cover in accordance with national and/or international
conventions, treaties, regulations and laws, including but not limited to the Civil
Liability Convention 1969, the 1992 Protocols to that Convention or the Oil Pollution
Act 1990 (or any subsequent amendment thereto), whichever be the case, up to
US$1 billion (or any greater amount as may be available under the rules of P&I Clubs
entered into the International Group of P&I Clubs);
c) the Performing Vessel shall be entered in and shall remain entered with a P&I Club
which is a member of the International Group of P&I Clubs;
d) the Performing Vessel shall comply with the requirements of the ISM Code and shall
have on board a valid ISM Code Safety Management Certificate for the Performing
Vessel and a copy of the Vessel Manager’s Document of Compliance as required by
the ISM Code and SOLAS;
e) the Performing Vessel shall be manned and maintained so as to fully comply with the
standards set out in ISGOTT, comply with appropriate IMO recommendations and
comply with the OCIMF Guidelines for the control of drugs and alcohol onboard ship
(1995), and every further revision or amendment;
f) the Performing Vessel shall comply with the requirements of the ISPS Code and,
if the Discharge Terminal is within the USA, its territories or waters, with the US
Maritime Transportation Security Act 2002 (MTSA);
g) the Performing Vessel shall have on board a valid International Ship Security Certificate
and any other required valid certificates and documents issued pursuant to the ISPS
Code;
h) the Performing Vessel shall be capable of discharging the Cargo at a rate typical of
the type, size and characteristics of the Performing Vessel, and
i) the Performing Vessel shall be fitted with an inert gas system (IGS), which shall at all
times be maintained in good working order, and the Cargo tanks shall be inerted.
6.1.2 The Seller shall nominate a Performing Vessel that is capable of meeting the following criteria:
a) compliance at all times with all restrictions at the Loading Terminal and the Discharge
Terminal with respect to maximum draught, length, deadweight, displacement,
age, flag and the like, the procedures of the Discharge Terminal relevant to health,
safety and Vessel operations and all requirements of governmental authorities
with jurisdiction over the Loading Terminal and Discharge Terminal (the Terminal
Requirements). Notwithstanding 6.2.1(d), the Seller shall be deemed to be fully
familiar with the Terminal Requirements and acknowledges that the Terminal
Requirements apply to the loading and discharge of the Cargo and to the Performing
Vessel at the Loading Terminal and Discharge Terminal, and
b) full compliance with all applicable laws, regulations and other requirements of the
Performing Vessel’s registry and countries, port authorities and terminals at which
the Performing Vessel may be loading or discharging pursuant to this Agreement.
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6.1.3 Notwithstanding any prior acceptance of the Performing Vessel by the Buyer, if at any time
the Performing Vessel is found not to be capable of complying with any of the requirements
set out in 6.1.1 and 6.1.2, then:
a) The Buyer may at any time refuse to berth or discharge or continue to discharge the
Performing Vessel and all time lost or spent as a result thereof shall not count as used
Laytime, or if the Performing Vessel is on demurrage, as demurrage, and
b) The Seller shall be obliged to substitute the Performing Vessel with a Vessel of a size
and capacity equivalent to those of the Vessel originally nominated and complying
with the requirements of 6.1.1 and 6.1.2.
6.2 DISCHARGE TERMINAL
6.2.1 The Buyer shall:

a) Provide, or cause to be provided, free of charge to the Seller a berth or berths
which the Performing Vessel can safely reach and leave and at which she can lie and
discharge the Cargo safely afloat. The provisions of 6.2.1(a) shall be subject to the
Seller’s obligation to be fully familiar with the Terminal Requirements pursuant to
6.1.2(a).
b) Notify the Seller of the berth or place at which the Performing Vessel shall discharge
the Cargo. Notification via the parties’ appointed agents or representatives shall be
sufficient for the purposes of this section.
c) At all material times and at its own expense provide and maintain or cause to
be provided and maintained in good working order, all necessary flexible hoses,
connections, pipelines, tankage facilities and other accommodation for discharging
the Performing Vessel.
d) Provide all information readily available to it concerning the Terminal Requirements
with respect to the Discharge Terminal, upon the Seller’s written request.
6.2.2 The Buyer shall procure that the Discharge Terminal shall comply with the requirements of
the ISPS Code and, if the Discharge Terminal is within the USA, its territories or waters, the
MTSA.
6.2.3 Save where the Performing Vessel fails to comply with 6.1 and such failure results in the
delay, time spent, costs or expenses in question, if the Buyer and/or the Discharge Terminal
fails to comply with the requirements of 6.2.1 or 6.2.2 (subject to 6.2.4):
a) The Seller may at any time refuse to berth or discharge or continue to discharge the
Performing Vessel and all time lost or spent as a result thereof shall count as Laytime
or, if the Performing Vessel is on demurrage, as time on demurrage.
b) The Buyer shall be liable for any delays, time spent, costs or expenses incurred by
the Seller or the Performing Vessel as a result, including without limitation any
demurrage, any additional charges, fees or duties levied and any time required or
costs incurred in the Performing Vessel taking any action or special or additional
security measures required by the ISPS Code or MTSA.
c) The Buyer shall be liable for any demurrage incurred by the Seller as a result of delays
to the Performing Vessel at the Discharge Terminal caused by the Performing Vessel
being required by the port or other relevant authority to take any action or special
or additional security measures or undergo additional inspections by virtue of the
Performing Vessel’s previous ports of call.
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6.2.4 Notwithstanding any provisions of the Agreement to the contrary, the Buyer shall not be
liable for any loss, damage, injury or delay resulting from any unsafe condition of any port,
berth or anchorage which could have been avoided by the exercise of reasonable care on the
part of the Seller or the Performing Vessel, its master, crew or officers.
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7 OPERATIONAL PROVISIONS
7.1 VESSEL NOMINATIONS
7.1.1 Not less than eight (8) days prior to the first day of the Loading Period the Seller shall send
written notice to the Buyer nominating a Vessel suitable for delivery of the Cargo. Such
notice shall specify:
a) the name of the Vessel, date built, summer deadweight and Cargo tank capacity
excluding slop tanks and flag;
b) Loading Terminal and the Loading Period;
c) the grade and approximate quantity of Oil to be loaded (or the bill of lading quantity,
if known);
d) the ETA of the Vessel at the Discharge Terminal;
e) the length of the Vessel and such other information as may be required by the
Discharge Terminal operator from time to time;
f) details of any Cargo on board or to be laden on board if loading a part Cargo, and
g) the Performing Vessel/charterer’s agent at the Discharge Terminal.
7.2 VESSEL REJECTION OR ACCEPTANCE
7.2.1 The Buyer shall notify the Seller in writing of the acceptance or rejection of the Vessel within
one Banking Day of the receipt of a Vessel nomination or request for substitution.
7.2.2 Subject always to 7.2.3, the Seller shall have the right to substitute another Vessel at any
time prior to passing of title to the Cargo provided the substituted Vessel’s size, Cargo tank
capacity (excluding slop tanks), loading quantity, ETA at the Discharge Terminal and, if the
price is based on bill of lading date, then the bill of lading date itself, are equivalent to those
of the initially nominated Vessel. Notwithstanding the foregoing, where a Loading Period is
specified in the Written Confirmation (or otherwise agreed between the parties), the Seller’s
right to nominate a substitute Vessel may only be exercised prior to the commencement of
loading of the Performing Vessel at the Loading Port.
7.2.3 At any time prior to commencement of loading the Buyer shall have the right to reject any
Vessel or any Vessel nomination or substitution, or to refuse to accept a Vessel for loading
on any reasonable grounds, including, without limitation, if the Vessel is not approved under
the Buyer’s Vessel vetting procedures.
7.2.4 Notwithstanding the prior acceptance by the Buyer of any Vessel, at any time prior to
commencement of loading the Buyer shall have the right to reject any Vessel if:
a) The Vessel is involved in an accident which is likely to have had a negative effect on
the safety of the Vessel.
b) Information regarding the Vessel becomes available which indicates that the
information relied upon by the Buyer in accepting the Vessel was materially incorrect
or incomplete.
7.2.5 Without prejudice to the Buyer’s rights, if the Buyer rejects any Vessel or any Vessel nomination
or substitution or refuses to accept any Vessel for loading in accordance with the Agreement,
the Seller shall nominate an alternative Vessel as soon as possible.
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7.2.6 The Buyer shall incur no liability in rejecting any Vessel or any Vessel nomination or substitution
or in refusing to accept any Vessel for loading in accordance with 7.2.
7.2.7 The Buyer’s acceptance of any Vessel in respect of any one Cargo shall not constitute a
continuing acceptance of such Vessel in respect of any subsequent Cargo.
7.3 VESSEL’S ESTIMATED TIME OF ARRIVAL (ETA)
7.3.1 The Seller shall procure that the Performing Vessel or its agent shall give to the Buyer or its
representative seventy two (72), forty eight (48) and twenty four (24) hours’ notice of the
ETA of the Performing Vessel at the Discharge Terminal and additional notice as may be
required by the Discharge Terminal.
7.3.2 Any delays directly resulting from any failure to give notice of ETA in accordance with 7.3.1
shall not count as Laytime or, if the Performing Vessel is on demurrage, as time on demurrage.
7.4 SHIFTING
7.4.1 The Buyer shall have the right to shift the Performing Vessel from one safe berth to another
safe berth within the Discharge Terminal.
7.4.2 If shifting is requested or required by the Buyer or the Discharge Terminal, all shifting costs
shall be for the Buyer’s account and time spent shifting shall count as Laytime or, if the
Performing Vessel is on demurrage, as time on demurrage.
7.4.3 If shifting takes place for any other reason (including without limitation any shifting of the
Performing Vessel off the berth due to a breakdown or deficiency of the Performing Vessel, its
master or crew), all shifting costs shall be for the Seller’s account and time spent shifting shall
not count as Laytime or, if the Performing Vessel is on demurrage, as time on demurrage.
7.5 LAYTIME
7.5.1 The time allowed to the Buyer to discharge the Cargo shall be thirty six (36) running hours
(or pro rata for part Cargoes), Sundays and holidays included, unless discharging on the
Sunday or holiday in question is prohibited or impossible by law, regulation or custom at the
Discharge Terminal (the 'Laytime').
7.5.2 Subject to 7.5.5, 7.5.6 and 7.5.7, Laytime shall commence 'berth or no berth' six (6) hours
after NOR is tendered or when discharge from the Vessel commences, whichever first occurs.
7.5.3 Time shall cease to run upon final disconnection of hoses after completion of discharge of
the Cargo.
7.5.4 Subject to 2.3.2, if the Seller has provided the Buyer with Indicative Discharge Date(s) and
a valid NOR is tendered within the Indicative Discharge Date(s), Laytime shall commence in
accordance with 7.5.2.
7.5.5 Subject to 2.3.2, if the Seller has provided the Buyer with Indicative Discharge Date(s) and a
valid NOR is tendered prior to the Indicative Discharge Date(s), Laytime shall commence berth
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or no berth at 0600 hours local time on the first day of the Indicative Discharge Date(s) or
when discharge from the Vessel commences at the discharge berth, whichever first occurs.
7.5.6 Subject to 2.3.2, if the Seller has provided the Buyer with Indicative Discharge Date(s) and
a valid NOR is tendered after the last day of the Indicative Discharge Date(s), Laytime shall
commence 'berth or no berth' thirty six (36) hours after NOR is tendered or when discharge
from the Vessel commences at the discharge berth, whichever first occurs.
7.5.7 If the Seller has provided the Buyer with Guaranteed Discharge Date(s) and:
a) a valid NOR is tendered within the Guaranteed Discharge Date(s), Laytime shall
commence in accordance with 7.5.2;
b) a valid NOR is tendered prior to the Guaranteed Discharge Date(s), Laytime shall
commence berth or no berth at 0600 hours local time on the first day of the
Guaranteed Discharge Date(s) or when discharge from the Vessel commences at the
discharge berth, whichever first occurs, or
c) a valid NOR is tendered after the last day of the Guaranteed Discharge Date(s), the
Buyer shall be under no obligation to accept the Oil but if the Buyer accepts the Oil
Laytime shall start upon commencement of discharge.
7.6 DEMURRAGE RATE
7.6.1 If the time used to discharge the Cargo exceeds Laytime, the Buyer shall pay demurrage in
respect of the time used in excess of Laytime at the rate specified in the Confirmation or, if
no rate is specified in the Confirmation, at the following rates:
a) For voyage chartered Vessels, the rate specified in the Performing Vessel’s
transportation contract.
b) For owned or time chartered Vessels, the Worldscale freight rate per day corrected
by AFRA for an equivalent Vessel performing the Agreement at the beginning of the
month in which the NOR is tendered, irrespective of the reference period mentioned
in the publication.
7.6.2 If time is lost in berthing or discharging (a Delay), whether prior to or after the expiry of
Laytime, due to (each a Specified Event):
a) adverse weather conditions or adverse sea state, including but not limited to
lightning, restricted visibility (which shall mean any condition in which visibility is
restricted by fog, mist, falling snow, ice, heavy rainstorms, sandstorms and any other
similar causes), storm, wind, waves and/or swells;
b) fire or explosion;
c) strike, picketing, lockout, slowdown, stoppage or restraint of labour of tugboats,
pilots or in or about the facilities of the Discharge Terminal, Buyer or Buyer’s customer;
d) breakdown of machinery or equipment in or about the facilities of the Buyer or
Buyer’s customer provided such breakdown is not caused by the Seller’s intent or
negligence, or
e) any occurrence which has been declared a Force Majeure event,
such time shall count as one half of the actual time lost.
7.6.3 The provisions of 7.6.2 apply irrespective of whether the Discharge Terminal is specified in
the Agreement or selected pursuant to an option as to the Discharge Terminal.
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7.7 EXCEPTIONS TO LAYTIME AND DEMURRAGE
7.7.1 Whether or not the Performing Vessel is on demurrage, any time taken for any of the
following purposes shall not be counted or included in calculating the time taken by the
Buyer to discharge the Oil or time in respect of which the Buyer is liable for demurrage:
a) Inward passage including but not limited to awaiting daylight, tugs, tide, pilot
and moving from anchorage or other waiting place until the Performing Vessel is
securely moored at the berth or any other discharging place (such passage will not
be considered to be shifting under 7.4).
b) Time taken in handling or preparing to handle ballast, slops, bunkers or other
substances, unless this is carried out concurrently with discharging or other normal
Cargo operations so that no time is lost in discharging.
c) Time taken in cleaning and/or inspecting and/or changing and/or inerting the
Performing Vessel’s Cargo tanks, pumps or lines, unless this is carried out
concurrently with discharging or other normal Cargo operations so that no time is
lost in discharging.
d) Time spent in complying with the regulations and other requirements of discharging
operations of the Discharge Terminal (including but not limited to any requirements
with regard to the equipment on board the Performing Vessel).
e) Restrictions on discharge operations attributable to the Performing Vessel, master,
officers, crew and/or owner including but not limited to overflows, breakdowns,
inefficiencies, repairs or an inability to discharge the Oil within the time allowed.
f) Time spent due to labour disputes, strikes, go slows, work to rules, lockouts,
stoppages or restraints of labour involving the master, officers or crew of the
Performing Vessel unless any of the foregoing existed when the Buyer nominated
the Discharge Terminal.
g) Any delays caused by an escape or discharge of Oil and/or pollutant substances
(Pollutants), or a grave and imminent danger of an escape or discharge of Pollutants
on or from the Performing Vessel which could lead to a serious danger of pollution
damage;
h) Restrictions or prohibitions on discharging imposed by the port authority, owner,
charterer or master of the Performing Vessel, or
i) Any other delay attributable to the Performing Vessel, the Seller or agents of the
Seller.
7.7.2 In case the Performing Vessel is part loaded with oil being delivered by the Seller to another
receiver at the same berth, the Buyer shall only be liable for demurrage insofar as it arises as
a result of delay in discharging the part Cargo delivered by the Seller to the Buyer.
7.8 DEMURRAGE CLAIMS
7.8.1 The Buyer shall not be liable for demurrage under the Agreement unless the Buyer receives
from the Seller, within ninety (90) days from the date of completion of discharge, notification
of the Seller’s demurrage claim in writing together with such documentation as the Buyer
may reasonably require, in support of its claim. Any documentation not then available shall be
provided by the Seller within one-hundred and eighty (180) days of completion of discharge.
7.8.2 If the Seller fails to comply with 7.8.1, all demurrage claims shall be deemed to have been
waived by the Seller and shall be absolutely barred.
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8 ADDITIONAL PROVISIONS
8.1 The discharge of part Cargoes is deemed to be accepted by the Buyer.
8.2 The Buyer shall arrange for each Performing Vessel to be discharged as expeditiously as
possible.
8.3 All taxes, duties, imposts, fees, charges (including, without limitation, pilotage, mooring and
towage expenses), and dues (including, without limitation, quay dues), in respect of the
Performing Vessel incurred at the Discharge Terminal, other than those which are for the
account of the Performing Vessel’s owner according to Worldscale, shall be for the account
of the Buyer.
8.4 Turkish Straits Transit: the Seller shall exercise reasonable efforts to ensure that the Vessel
shall comply with all regulations and recommendations as set out in the Turkish Straits
Maritime Traffic Scheme Regulations dated 6 November 1998, as amended from time to
time.
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9 INSURANCE
9.1 If the Agreement is in respect of CFR sales, the Buyer at its option shall procure and pay for
an insurance policy in respect of the Oil at its expense and the responsibility for securing
insurance, whether against marine or other risks, shall rest wholly with the Buyer.
9.2 If the Agreement is in respect of CIF sales, the Seller shall procure and pay for an insurance
policy in respect of the Oil.
9.3 The insurance policy to be procured by the Seller, as the case may be, in accordance with the
Agreement shall:
9.3.1 provide cover against ordinary marine risks and including the risk of shortage, leakage
and contamination howsoever caused (but excluding war, strikes, riots, civil commotions,
blocking and trapping), to the full value of the Oil plus 10 %;
9.3.2 cover the Oil from passing the manifold flange connection of the Performing Vessel’s delivery
hose at the Loading Terminal to passing the permanent connection of the Performing Vessel’s
delivery hose at the Discharge Terminal, and
9.3.3 be in accordance with the provisions of the Institute Cargo Clauses (A) or ILU Bulk Oil Clauses
273.
9.4 Where requested by the Buyer, the Seller shall provide the Buyer with an original certificate
of insurance.
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10 WAR AND ICE CLAUSE
10.1 The Seller may, at any time, refuse to direct any Vessel:
10.1.1 to transit or proceed to or remain in waters if such a direction would involve a breach of
any Institute warranties (if applicable) or, in the Seller’s opinion, a risk to the Vessel’s safety
(including but not limited to risks arising out of war, war-like operations, hostilities, civil
strife, terrorism or other politically or religiously motivated activities or piracy), or a risk of ice
damage to the Vessel;
10.1.2 to transit or proceed to or to remain in water proximately located to a place in which a war
(which shall include but not be limited to states of war, war-like operations or hostilities, civil
strife, terrorism or other politically or religiously motivated activities or piracy), is present or
imminent, or
10.1.3 to undertake any activity in furtherance of the voyage which in the opinion of the Vessel’s
master could place the Vessel, its Cargo or crew at risk.
10.2 Notwithstanding and without prejudice to the provisions of 10.1, if the Seller directs a
Vessel to undertake or complete a voyage as referred to in 10.1, the Buyer shall nonetheless
reimburse the Seller, upon receipt of the Seller’s invoice supported by proof of payment by
the Seller, any costs incurred by the Seller in respect of any additional insurance premium
including, but not limited to any and all costs in respect of war risk insurance for the Vessel’s
hull and machinery in respect of the voyages to any of the ports of loading or discharge or any
war through which the Vessel has to travel in the performance of the Agreement, including
any additional insurance or war risk insurance premium, as well as crew war bonuses or any
other bonuses in relation to the shipment and any reasonable escort costs.
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11 ALTERNATIVE OR ADDITIONAL DISCHARGE TERMINAL
11.1 Where under the Confirmation, the Buyer has discharge port options, the Buyer shall
exercise any such discharge port options in accordance with the terms and conditions of
the Confirmation and the terms of the relevant charter party available to the Seller. The
Buyer shall be liable for any extra costs (including, but not limited to, any additional freight
or hire, detention and deviation costs), incurred by the Seller as a result of the alternative or
additional discharge port nomination. In exercising its discharge port options, the Buyer must
take account of the dimensions and characteristics of the Vessel nominated by the Seller.
11.2 The Seller shall account to the Buyer for any reduction in the freight payable by the Seller as
a result of an alternative or additional Discharge Terminal nomination pursuant to 11.1.
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12 LIGHTERING AND STS OPERATIONS
12.1 Vessels shall not be compelled to lighter or conduct STS operations at the Discharge Terminal
unless agreed by the parties, a request by either party not to be unreasonably refused.
12.2 If any lightering or STS operations are undertaken at the request of the Buyer, the following
provisions shall apply:
12.2.1 such operations shall be conducted entirely at the Buyer’s risk and expense and outside port
limits;
12.2.2 the Buyer shall be liable to the Seller in respect of any losses, costs, damages and proceedings
arising from or in connection with such operations and shall indemnify the Seller in respect
thereof. This section shall not be included in the scope of 16.1;
12.2.3 all time expended in connection with such operations shall count as running hours for the
purposes of calculating the liability for demurrage under the provisions of 7.6 and 7.7;
12.2.4 any additional steaming and/or waiting time used solely for the purposes of any such
operation shall count as Laytime or, if the Vessel is on demurrage, as demurrage, and
12.2.5 such operations shall be carried out in accordance with the procedures set out in the ICS/
OCIMF ship-to-ship transfer guides. The lightering or receiving Vessel(s) in the case of STS
operations shall be subject to the Seller’s prior acceptance, which shall not be unreasonably
withheld.
12.3 In relation to any dispute as to quantity when lightering or Ship-to-Ship transfers have been
undertaken the first laden Vessel’s figures (not being a lightering Vessel or a receiving Vessel)
shall prevail, subject always to the provisions of 4.4.
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13 CRUDE OIL WASHING/STRIPPING
13.1 Any time used during discharge for crude oil washing and/or stripping of Cargo tanks and
lines (except for any time used to comply with Marpol Regulations), shall count as Laytime,
or if the Vessel is on demurrage, as time on demurrage.
13.2 The Buyer shall advise the Seller at least two (2) working days prior to the Vessel’s arrival at
the Discharge Terminal as to whether crude oil washing is required. Time allowed for crude
oil washing shall be limited to six (6) hours.
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14 NON-PERFORMANCE
14.1 FORCE MAJEURE
14.1.1 A party shall not be deemed to be in breach of the Agreement or be liable to the other party
if a party (the Affected Party), is hindered or prevented from complying with its obligations
under the Agreement by reason of Force Majeure. The Affected Party shall use all commercially
reasonable efforts to remedy the Force Majeure event or mitigate its effects.
14.1.2 The Affected Party shall give notice (a Force Majeure Notice) to the other party promptly
upon becoming aware of the Force Majeure event, stating the nature of the Force Majeure
event, its effect or anticipated effect on the obligations under the Agreement of the Affected
Party, and the estimated date the contingency is expected to be removed. The Affected Party
shall also give a further notice to the other party upon becoming aware of the cessation or
removal of the Force Majeure event.
14.1.3 If the Force Majeure event continues for the duration of the Loading Period the parties shall
be relieved of all further contractual obligations with respect to the affected Cargo from the
time the Loading Period ends.
14.1.4 For the purpose of this clause, Force Majeure means an event beyond the reasonable control
of the Affected Party. Such events may include (without limitation), the following: any act
of God or the elements, earthquakes, floods, landslides, civil disturbances, sabotage, acts of
public enemies, war, blockades, insurrections, riots, acts of piracy or terrorism, epidemics,
the act of any government or other authority or statutory undertaking, the inability to obtain
or the curtailment of electric power, water or fuel boycotts, strikes, lockouts or other labour
disruptions, fires, explosions, breakdowns or failure of pipe, plant, machinery, equipment
,any curtailment of, hindrance to or interference with or delay to the availability, delivery or
transportation of any Oil as a result of the Seller’s actions based on compliance with a request
or requirement by or through the International Energy Agency.
14.1.5 For the avoidance of doubt the following shall not constitute Force Majeure events with
respect to a party seeking to invoke this clause: a lack of funds, the availability of a more
attractive market, inefficiencies in operation or, in the case of parties owned or controlled by
a government or agency thereof, any act, action, order, decree, rule, regulation or directive
of such government or agency thereof.
14.1.6 Notwithstanding this clause, neither party shall be relieved of making payment in full and in
accordance with the Agreement of any sums that have accrued due under the Agreement
prior to its termination including but not limited to the price and demurrage.
14.1.7 No provision of this clause shall operate to extend the term of the Agreement or to oblige
either party to make good any shortage or deficiency of delivery whether by purchasing Oil
from third parties or otherwise.
14.2 DEFAULT AND TERMINATION
14.2.1 An event of default (Event of Default), with respect to a party (a Defaulting Party), shall mean
the party filing a petition or otherwise commencing or authorising the commencement of a
proceeding or case under any bankruptcy, reorganisation, or similar law for the protection of
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creditors, or having any such petition filed or proceeding commenced against it, or otherwise
becoming bankrupt or insolvent (however evidenced), or being unable to pay its debts as
they fall due by acceleration or otherwise.
14.2.2 Upon the occurrence and continuation of an Event of Default, the party other than the
Defaulting Party (the Non-Defaulting Party), may at any time in its sole discretion by written
notice to the Defaulting Party:
a) withhold the performance of its obligations (including any obligation to make
payment to the Defaulting Party) under the Agreement until such Event of Default is
cured; and/or
b) terminate the Agreement.
14.2.3 The provisions of this section shall be strictly without prejudice to any of the parties’ other
rights and remedies under the Agreement and/or at law.
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15 TAXES AND LICENCES
15.1 TAXES
15.1.1 The Seller shall be responsible for and shall indemnify the Buyer in respect of any existing or
future duties, taxes, tariffs, fees or charges whatsoever arising prior to passing of title to the
Buyer in connection with the Oil or its sale, delivery or export.
15.1.2 The Buyer shall be responsible for and shall indemnify the Seller in respect of any existing or
future duties, taxes, tariffs, fees or charges whatsoever arising upon passing of title to the
Buyer in connection with the Oil, its sale, delivery, import/export or use.
15.1.3 If the sale of the Oil is subject to VAT, this section shall apply:
a) Unless otherwise expressly provided in the Agreement, the price is exclusive of VAT.
b) Both the Buyer and the Seller recognise that VAT may be due on the transaction
outlined in the Agreement and both parties agree to supply all necessary information
required to determine the VAT treatment and to issue invoices compliant with the
VAT laws of the country in which the transaction occurs or is treated as occurring for
the purposes of VAT.
c) Where in accordance with such VAT rules any supplies under an individual contract
may be zero-rated:
i. the Buyer shall do all such proper acts, deeds and things as are necessary
(which may include, but shall not be limited to, providing the Seller
with all such proper, true and accurate documentation or assistance as
may reasonably be required by the relevant taxing or other authority or
government body) to ensure that such supply is zero-rated for the purposes
of such VAT rules, and
ii. provided that the Buyer complies with (i) above, such supplies shall be
zero- rated.
15.2 LICENCES
15.2.1 Each party shall obtain and maintain all licences, consents, permits, approvals and
authorisations necessary to enable it to perform its obligations and comply with the terms of
the Agreement.
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16 LIMITATION OF LIABILITY
16.1 Except as provided for in 12.2, neither party shall be liable in contract or in tort or otherwise
for any consequential or indirect damage, loss or expense (including, without limitation, loss
of anticipated profit, loss of revenue, plant or refinery, shutdown, reduced production, loss
of power generation, blackouts or electrical shutdown or reduction, loss of goodwill, loss of
use or business interruption, loss of market reputation, loss of business receipts, contracts or
commercial opportunities), arising out of the performance or non-performance of any term
of the Agreement, whether or not such damage, loss or expense is foreseeable.
16.2 Without prejudice to any other provision of the Agreement, any claim arising out of or in
connection with the Agreement shall be notified to the other party and arbitration or legal
proceedings, as appropriate, commenced in accordance with section 27 no later than one (1)
year from the bill of lading date or, absent a bill of lading, the first day of the Loading Period,
failing which the claim shall be deemed to have been waived by the claiming party and shall
be absolutely barred.
16.3 The provisions of this section shall survive and continue to apply notwithstanding any
termination of the Agreement.
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17 NOTICES AND COMMUNICATIONS
17.1 Unless otherwise provided in the Agreement, all notices and communications under the
Agreement shall be made in writing to the addresses or fax numbers set out in the Agreement
by fax, courier or registered post and shall be deemed given and delivered:
a) if given by fax, where an answerback is provided and can be certified, if the
addressee’s answerback is received within office hours in the place of the addressee,
then on that day; in any other case, on the working day in the place of the addressee
after the day on which the addressee’s answerback is received, or
b) if given by courier or registered post, if delivered within office hours in the place of
the addressee, then on that day; in any other case it will be treated as being received
on the next Working Day in the place of the addressee.
17.2 Except for notices for assignment, termination and legal or arbitration proceedings, parties
may exchange messages with respect to the performance of the Agreement by email. Any
message sent by email shall be sent to the address of the other party specified for this
purpose in the Agreement. Notwithstanding the foregoing, email messages are only valid if
actually received and the sender bears the risk of a failure in transmission. Email messages
sent and received shall be deemed to have been received, if sent within office hours in the
place of the addressee, then on that day; in any other case, on the next Working Day in the
place of the addressee after the date it was sent.
17.3 Any notice or communications, including any notice of legal or arbitration proceedings, sent
to any address or number or transmitted by any means other than in accordance with 17.1
or 17.2 shall have no legal or contractual force or effect.
17.4 Notices may not be given by instant messaging.
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18 RECORDING, RETENTION AND MONITORING OF

COMMUNICATIONS
18.1 Each party hereby acknowledges to the other party and consents that such other party may
from time to time and without further notice and to the extent permitted by law:
a) record and retain electronic transmissions (including telephone conversations, email
and instant messaging between the parties’ respective representatives in connection
with the Agreement or other commercial matters between the parties), on central
and local databases for their legitimate purposes, and
b) monitor electronic transmissions through their internal and external networks for
purposes of security and compliance with applicable laws, regulations and internal
policies for their other legitimate business purposes.
18.2 In case of disagreements, misunderstandings or any other problem, any records of electronic
transmissions retained by the parties may be used to assist in the resolution of such matters.
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19 DESTINATION AND SANCTIONS COMPLIANCE
19.1 DESTINATION
19.1.1 The parties agree to comply with and abide by all applicable economic sanctions and export
control laws and regulations.
19.1.2 The Buyer shall not, as a condition of the Agreement, directly or indirectly and irrespective of
means (whether through the Buyer or any third party):
a) on-sell, supply, deliver or otherwise dispose of the Oil (or any part thereof), to any
person or entity in any Restricted Destination or for importation into any Restricted
Destination, or
b) ship the Oil (or any part thereof) to or import the Oil (or any part thereof), into any
Restricted Destination.
19.1.3 For the purposes of this section, Restricted Destination means any country, state, territory
or region against which there are sanctions imposed by the United Nations and/or to which
supplies of Oil are prohibited or restricted by the laws of, or any regulation, rule, directive or
guideline applied by the government of (or any agency thereof), the country of origin of the
Oil.
19.1.4 If the Buyer is, or is likely to be, prevented by any law, policy, demand or request to which
the Buyer is subject or any governmental policy, demand or request by which the Buyer is
bound from complying with the foregoing provisions of 19.1, the Buyer shall promptly notify
the Seller in writing of the cause of the prevention and the parties shall meet and discuss the
implications for them (and, pending resolution of any difficulty which such event causes or
is likely to cause, the Seller may at its discretion suspend delivery of any Cargo or Cargoes
under the Agreement), and the parties’ respective obligations shall be suspended until after
the meeting takes place but by no more than thirty (30) days from the Buyer’s notice.
19.1.5 In the event of any failure to comply with the provisions of 19.1, or if the Seller has reasonable
grounds for believing that the provisions of 19.1 will not be complied with, the Seller may
(without prejudice to its other rights), at its sole discretion upon giving written notice to the
Buyer:
a) terminate the Agreement forthwith;
b) forthwith suspend delivery under the Agreement until further notice, or
c) decline to commence or complete loading under the Agreement.
19.1.6 The Buyer shall be liable for any losses, damages, costs, expenses, fines and/or penalties
incurred by the Seller as a result of a breach by the Buyer of 19.1.
19.2 TRADE CONTROLS AND BOYCOTTS
19.2.1 Notwithstanding anything to the contrary elsewhere in the Agreement, nothing in the
Agreement is intended, and nothing herein should be interpreted or construed, to induce
or require either party hereto to act in any manner (including failing to take any actions in
connection with a transaction), which is inconsistent with, penalised or prohibited under any
laws, regulations, decrees, ordinance, order, demand, request, rules or requirements of the
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United States of America applicable to such party which relate to international boycotts of
any type.
19.2.2 Neither party shall be obliged to perform any obligation otherwise required by this Agreement
(including without limitation an obligation to (a) perform, deliver, accept, sell, purchase, pay
or receive monies to, from, or through a person or entity, or (b) engage in any other acts)
if this would be in violation of, inconsistent with, or expose such party to punitive measure
under, any laws, regulations, decrees, ordinances, orders, demands, requests, rules or
requirements of the EU, any EU member state, Switzerland, the United Nations or the United
States of America applicable to the parties relating to trade sanctions, foreign trade controls,
export controls, non-proliferation, anti-terrorism and similar laws (the Trade Restrictions).
19.2.3 Where any performance by a party would be in violation of, inconsistent with, or expose
such party to punitive measures under the Trade Restrictions, such party (the Affected Party)
shall, as soon as reasonably practicable give written notice to the other party of its inability
to perform. Once such notice has been given the Affected Party shall be entitled:
a) to immediately suspend the affected obligation (whether payment or performance)
until such time as the Affected Party may lawfully discharge such obligation, and/or
b) where the inability to discharge the obligation continues (or is reasonably expected
to continue) until the end of the contractual time for discharge thereof, to a full
release from the affected obligation, provided that where the relevant obligation
relates to payment for goods which have already been delivered, the affected
payment obligation shall remain suspended (without prejudice to the accrual of any
interest on an outstanding payment amount) until such time as the Affected Party
may lawfully resume payment, and/or
c) where the obligation affected is acceptance of the Vessel, to require the nominating
party to nominate an alternative Vessel,
in each case without any liability whatsoever to either party (including, but not limited to, any
damages for breach of contract, penalties, costs, fees and expenses).
19.2.4 Nothing in this section shall be taken to limit or prevent the operation, where available under
the governing law of the Agreement, of any doctrine analogous to the English common law
doctrine of frustration.
19.3 FACILITATION PAYMENTS AND ANTI-CORRUPTION
19.3.1 The Buyer and the Seller each agree and undertake to the other that in connection with the
Agreement, they will each respectively comply with all applicable laws, rules, regulations,
decrees and/or official government orders of the United Kingdom and the United States of
America or any other relevant jurisdiction relating to anti-bribery and anti-money laundering
and that they shall each respectively take no action which would subject the other to fines or
penalties under such laws, regulations, rules or requirements. The Buyer and the Seller each
represent, warrant and undertake to the other that they shall not, directly or indirectly:
a) pay, offer, give or promise to pay or authorise the payment of, any monies or other
things of value to:
i. a government official or an officer or employee of a government or any
department, agency or instrumentality of any government;
ii. an officer or employee of a public international organisation;
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iii. any person acting in an official capacity for or on behalf of any government
or department, agency, or instrumentality of such government or of any
public international organisation;
iv. any political party or official thereof, or any candidate for political office;
v. any director, officer, employee or agent/representative of an actual or
prospective counterparty, supplier or customer of the Buyer or the Seller;
vi. any other person, individual or entity at the suggestion, request or direction
or for the benefit of any of the above-described persons and entities, or
b) engage in other acts or transactions,
in each case if this is in violation of or inconsistent with applicable anti-bribery or anti-money

laundering legislation of any government, including the US Foreign Corrupt Practices Act,
the UK Anti-terrorism, Crime and Security Act 2001, the UK Bribery Act 2010, the Money
Laundering Regulation 1993, the Proceeds of Crime Act 2002 and applicable country
legislation implementing the OECD Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions.
19.3.2 In particular, the Seller represents and warrants to the Buyer that it has not made any
payments or given anything of value to officials, officers or employees of the government of
the country in which the Oil originated or any agency, department or instrumentality of such
government in connection with the Oil which is the subject of the Agreement which would
be inconsistent with or contravene any of the legislation as noted in 19.3.1.
19.3.3 The Buyer or the Seller may terminate the Agreement forthwith upon written notice to the
other at any time, if in their reasonable judgement supported by credible evidence the other
is in breach of any of the above representations, warranties or undertakings.
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20 REPRESENTATIONS, AMENDMENTS AND WAIVERS
20.1 NO REPRESENTATIONS
20.1.1 Each party acknowledges and represents that it has not relied on or been induced to enter into
the Agreement by any representation, warranty or undertaking other than those expressly
set out in the Agreement.
20.1.2 A party shall not be liable to the other party for a representation, warranty or undertaking of
whatsoever nature that is not expressly set out in the Agreement.
20.2 AMENDMENTS
20.2.1 No amendment of any provision of the Agreement shall be effective unless it is expressly
made in accordance with section 17.
20.3 WAIVERS
20.3.1 No waiver by either party of any right, power or remedy or of any provision of the Agreement
shall be effective unless it is expressly made and reduced to writing.
20.3.2 Any waiver of any breach of any provision of the Agreement by either party shall not be
considered to be a waiver of any subsequent or continuing breach of that provision.
20.3.3 No waiver by either party of any breach of any provision of the Agreement shall release,
discharge or prejudice the right of the waiving party to require strict performance by the
other party of any other of the provisions of the Agreement.
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21 RIGHTS, POWERS AND REMEDIES
21.1 No failure or delay on the part of either party in exercising any right, power or remedy under
the Agreement and no course of dealing between the parties shall operate as a waiver by
either party of any such right, power or remedy, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or the exercise of
any other right, power or remedy under the Agreement.
21.2 The remedies in the Agreement provided to the parties are cumulative and not exclusive of
any legal rights or remedies which the parties may otherwise have.
21.3 Except as required by the Agreement, no notice of demand upon the Seller or the Buyer in
any case shall entitle the Seller or the Buyer to any other or future notice or demand in similar
or other circumstances or constitute a waiver of the right of the Seller or the Buyer to take
any other or future action in any such circumstances without notice or demand.
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22 INTERPRETATIVE PROVISIONS
22.1 All headings used in the Agreement are for convenience only and shall not affect the
construction or interpretation of any of the terms and/or conditions of the Agreement.
22.2 The invalidity, illegality or unenforceability of any one or more of the terms of the Agreement
shall in no way affect or impair the validity, interpretation and enforceability of the other
terms of the Agreement.
22.3 If, for any reason, the Agreement is terminated then such termination shall be without
prejudice to any rights, obligations or liabilities of either party which have accrued at the date
of termination but have not been performed or discharged, and any parts of the Agreement
having any relevance thereto or any bearing thereon shall, notwithstanding the termination
of the Agreement for any reason, continue in force and effect.
22.4 Time is of the essence of the Agreement and every provision of the Agreement in which time
of performance is expressed to be a factor.
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23 HEALTH, SAFETY AND ENVIRONMENT
23.1 The Seller shall provide the Buyer with a copy of the current safety data sheet (SDS) for the
Oil and any other information relating to health safety and environmental data in connection
with the Oil in compliance with the requirements of any applicable laws, rules or regulations.
23.2 The Buyer shall use reasonable endeavours to provide all relevant third parties, including but
not limited to its employees, agents, contractors and any person to whom it supplies the Oil,
with the information provided in any SDS or similar information in respect of the Oil provided
by the Seller and any other relevant information relating to the safety, danger to health and
environment of the Oil provided by the Seller.
23.3 The Buyer shall be responsible for:

a) ensuring that all relevant obligations, recommendations, regulations, conventions or
guidelines in any relevant jurisdiction, whether international or local, are complied
with, and
b) any consequences that result from the use of an SDS.
23.4 To the extent permissible by law, the Seller shall be under no liability to the Buyer in respect
of any claim or proceeding whatsoever for loss, damage or personal injury resulting from any
hazards inherent in the nature of the Oil.
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24 TRADEMARKS
24.1 Nothing in the Agreement whether express or implied shall be deemed to confer any right
upon the Buyer to apply any trademark owned by the Seller or any of its Affiliates to any
crude Oil supplied under the Agreement nor to use such trade marks in relation to such crude
Oil nor vice versa in respect of any trademark owned by the Buyer.
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25 ASSIGNMENT
25.1 Neither party shall assign, create a trust over or otherwise transfer the whole or any part of
its rights hereunder directly or indirectly without the prior written consent of the other party,
such consent not to be unreasonably withheld.
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26 GOVERNING LAW
26.1 The laws of England shall govern the construction, validity and performance of the Agreement
to the exclusion of any other law which may be imputed in accordance with choice of law
rules applicable in any jurisdiction.
26.2 The UN Convention on Contracts for the International Sale of Goods of Vienna dated 11
April 1980 shall not apply to the Agreement.
26.3 The Contract (Rights of Third Parties) Act 1999 shall not apply to the Agreement.
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27 JURISDICTION
27.1 Unless otherwise agreed by the parties in the Confirmation or otherwise in writing, any
dispute arising out of or in connection with the Agreement, and whether arising in contract,
tort or otherwise, that is not amicably settled by the parties shall be subject to the exclusive
jurisdiction of the Commercial Court of the High Court in London.
27.2 Notwithstanding 27.1, neither party shall be precluded from pursuing arrest, attachment
and/or other conservatory, interlocutory or interim actions in the courts of any jurisdiction.
27.3 Each party warrants that it has entered the Agreement in its commercial capacity and that it
is in this respect subject to civil and commercial law. The Buyer and the Seller hereby waive,
to the fullest extent permitted by applicable law:
a) any objection to the jurisdiction of any court, venue or tribunal that is competent
pursuant to the terms of this Agreement or any claim of inconvenient forum of such
court, venue or tribunal, and
b) any right of sovereign immunity in respect of any arbitration or proceedings arising
out of or in connection with the Agreement.
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28 ELECTRONIC DOCUMENTS
28.1 If the Buyer and the Seller have expressly agreed in writing that any bill of lading, waybill,
delivery order, certificate, receipt or other document issued pursuant to, or in connection
with, the Agreement, including but not limited to the Payment Documents listed in 5.3.1,
may be issued, signed and transmitted electronically (each, an eDoc), then it is hereby
expressly agreed that any applicable requirement of law, contract, custom or practice that
any transaction, document or communication shall be made or evidenced in writing, signed
or sealed shall be satisfied by an eDoc and the parties hereto agree not to contend in any
dispute arising out of or in connection with any eDoc or any eDoc which is converted to
paper that it is not in writing or that it is not equivalent to an original paper document signed
by hand, or, as the case may be, sealed.
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ANNEX A
GLOSSARY OF TERMS
Affiliate in relation to either of the parties to the Agreement,

any Subsidiary or Holding Company of such party
or any Subsidiary or Holding Company of such
Subsidiary or such Holding Company.
AFRA Average Freight Rate Assessment as published
monthly by the London Tanker Brokers Panel.
Agreement any contract including by reference these General
Terms and Conditions.
Banking Day a day on which banks are open for normal business
both (a) in New York and (b) in the countries where
the parties are domiciled.
Barrel 42 US standard gallons at 60 degrees fahrenheit with
an absolute pressure of 1 atmosphere.
Cargo any specific quantity of Oil delivered or to be
delivered under the Agreement as one full or part
Cargo lot.
CIF and CFR shall each have the meaning ascribed to it in
Incoterms 2010 (or such later edition of Incoterms as
is published at the date of the Agreement), except
to the extent inconsistent with the terms of the
Agreement.
Confirmation the contract telex, facsimile, or other form of
communication by which the parties confirm the
Agreement, set out, amend or supplement these
General Terms and Conditions (a suggested format
for which is attached at Annex B), and which is the
confirmation from the Buyer that it has agreed to
purchase the Oil from the Seller and that it will pay
the price in respect of the Oil to the Seller’s bank
account.
Discharge Terminal means the port, terminal or other facility at which
the Oil to be delivered hereunder is to be discharged
from the Performing Vessel.
Documentary Credit any irrevocable documentary Letter of Credit opened
or to be opened in accordance with the Agreement.
eDoc has the meaning ascribed to it in 28.1.
EU the European Union and includes, where appropriate
and when reference is made to EU regulations, the
European Parliament, the Council of the European
Union, the European Commission or other relevant
regulatory body of the EU.
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FOB shall have the meaning ascribed to it in Incoterms

2010 (or such later edition of Incoterms as is
published at the date of the Agreement), except
to the extent inconsistent with the terms of the
Agreement.
Holding Company means in relation to a company or corporation, the
parent or majority shareholder or company having
control of any other company or corporation which
therefore will be deemed a subsidiary of the parent
company.
IMO International Maritime Organisation.
Indicative Discharge Date(s) has the meaning ascribed to it in 2.3.
Inspector has the meaning ascribed to that term in 4.2.2 (a) (ii).
ISGOTT the International Safety Guide for Oil Tankers and
Terminals published by the International Chamber of
Shipping and OCIMF.
ISM Code the International Safety Management Code.

ISPS Code the International Ship and POA Facility Security
Code and the relevant amendments to chapter XI of
SOLAS.
ITOPF the International Tanker Owners Pollution Federation
Limited.
Laytime the time allowed for the discharging of the
Performing Vessel, as defined in 7.5.1.
Letter of Credit any Documentary Credit or any Standby Credit.
LOI a Letter of Indemnity as referred to in 5.3.2.
LIBOR London Interbank offered Rates for one month
US dollar as administered by the ICE Benchmark
Administration (IBA) or any other entity which has
taken over administration of that rate as published
on the due date by Thomson Reuters on behalf of
the IBA.
Loading Period has the meaning ascribed to that term in 2.2.
Loading Terminal the port, terminal, berth or other facility at which
the Cargo is to be loaded on board the Performing
Vessel, including (if applicable) any place at which
the Performing Vessel is loaded by STS operations.
MARPOL the International Convention for the Prevention of
Pollution from Ships, as amended from time to time.
Month a month of the Gregorian calendar.
NOR a Notice of Readiness to load the Cargo given by the
master and/or the Performing Vessel in accordance
with the Agreement.
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OCIMF the Oil Companies International Marine Forum.

Oil the crude oil to be delivered under, and as described,
in the Agreement.
Payment Documents documents as defined in 5.3.
Payment Due Date the date on which payment of the price is due as
specified in the Agreement.
Performing Vessel the Vessel nominated by the Seller to take delivery of
any Cargo under the Agreement.
Pollutants toxic or contaminating substances that are likely to
have an adverse effect on the natural environment or
life.
SDS the safety data sheet containing such information
relating to the Oil as is required by the applicable
laws and regulations of the country in which the
Loading Terminal and/or Discharge Terminal are
located.
SOLAS the International Convention for the Safety of Life at
Sea, 1974, as amended from time to time.
Standard Practices the Standard Practices and procedures applicable
at the Loading Terminal in respect of sampling,
measuring and analysis of the Oil.
Standby Credit an irrevocable stand-by Letter of Credit opened or to
be opened in accordance with the Agreement.
STS Operations any operations involving the loading or discharge of
Oil on board the Performing Vessel by way of ship-
to-ship transfer (including any lightering operations).
Subsidiary in relation to a company or corporation, a company
or corporation which is controlled, directly or
indirectly, by the first mentioned company or
corporation or which is a subsidiary of another
subsidiary of the first mentioned company or
corporation and for these purposes a company or
corporation shall be deemed to control another if
it is able to direct that other’s affairs and/or control
the composition of that other’s board of directors
(or equivalent body) and/or it beneficially owns more
than half the issued share capital of that other.
Terminal Representative has the meaning ascribed to that term in 4.2.2(a) (i).
Terminal Requirements has the meaning ascribed to that term in 6.1.2(a).
Typical a quality or characteristic often attributable to crude
Oil from a particular source.
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VAT within the EU, such tax as may be levied in

accordance with EC VAT Directive 2006/112/EC and,
outside the EU, means tax levied by reference to
the relevant VAT/GST/similar tax legislation of that
jurisdiction.
Vessel the sea or ocean carrier or ship which is wholly or
mainly constructed or is adapted for the carriage of
Oil.
Working Day normal working days (i.e. excluding weekends and
national holidays) at the location specified.
Worldscale the New Worldwide Tanker Nominal Freight Rate
Scale.
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ANNEX B
CONFIRMATION OF CIF OR CFR SALE AGREEMENT
Suggested format for Confirmation use when selling or buying Crude Oil CIF or CFR subject
to the EI Model General Terms and Conditions for the CIF or CFR Sale and Purchase of Crude
Oil.
Date of Confirmation: (Date document generated)

Confirmation no: (Contract reference number)
Date of Agreement: (Date trade negotiated)
We confirm the following terms and conditions of the transaction entered into between
(insert name of Seller), as the Seller, and (insert name of Buyer), as the Buyer (each a Party
and together the Parties) as concluded during a telephone conversation between (Seller
trader name) and (Buyer trader name) on (date of conversation).
Seller (insert name)

(insert address)
Buyer (insert name)
(insert address)
Description of the Oil (name and grade of the crude) (the ‘Oil’)
Quantity (insert quantity and unit)
Quality (Stipulate exact specification or insert: ‘The quality of
the Oil shall be the export quality of (name) crude Oil
as generally made available at the place (and time) of
loading’)
Loading Period (Insert dates within which NOR must be tendered at the
Loading Terminal)
Delivery (In (one Cargo lot) (as full or part Cargo) CIF [or CFR](name
of Discharge Terminal (s)))
Discharge Period (Insert ‘None’ or insert date range and check ‘Guaranteed’
or ‘Indicative only’, as applicable)
□ Guaranteed
□ Indicative only
Price (State price or price formula)
Payment method (State payment method)
Deadline for Buyer’s (Stipulate deadline for opening of Letter of Credit where
Letter of Credit applicable (e.g. where a Cargo is sold without a stipulated
Loading Period).
Payment Due Date Payment shall be due on (insert date)
Interest rate payments (insert applicable rate, e.g. LIBOR + ( ) %)
applicable to late
payments
Laytime ( )
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Demurrage rate (insert agreed rate)

Governing law The laws of (insert England and Wales or (name of other
jurisdiction))
Dispute Resolution (Any dispute arising out of or in connection with the
Agreement that is not amicably settled by the Parties shall
be subject to the exclusive jurisdiction of the courts of
England and Wales)
or
(27.1 and 27.2 of the Model General Terms and Conditions
shall not apply and any dispute arising out of or in
connection with the Agreement that is not amicably
settled by the Parties shall be finally referred to and
resolved by arbitration in accordance with the London
Court of International Arbitration (LCIA) rules, which rules
are deemed to be incorporated by reference into the
Agreement. The seat or legal place of arbitration shall be
London, England. The Arbitral Tribunal shall consist of
three (3) arbitrators. Notwithstanding the above, neither
Party shall be precluded from pursuing arrest, attachment
and/or other conservatory, interlocutory or interim actions
in the courts of any jurisdiction)
Other terms (Insert any other agreed terms)
1. The Agreement incorporates the EI HM 81 Model general terms and conditions for
CIF and CFR sale and purchase of crude oil (the ‘General Terms and Conditions’) all
of which the parties acknowledge and admit they have full notice.
2. Please fax a duly executed copy of this Confirmation to our facsimile number specified
below. The absence of a signed and/or otherwise duly executed Confirmation on the
part of either Party or both Parties shall not affect the validity of and binding nature
of the Agreement.
Notices:
Seller: (name of seller) Buyer: (name of buyer)
(address) (address)
Tel: ( ) Tel: ( )
Fax: ( ) Fax: ( )
Email: ( ) Email: ( )
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This publication has been produced as a result of
work carried out within the Technical Team of the
Energy Institute (EI), funded by the EI’s Technical
Partners and other stakeholders. The EI’s Technical
Work Programme provides industry with cost
effective, value adding knowledge on key current
and future issues affecting those operating in the
Energy Institute energy sector, both in the UK and beyond.
61 New Cavendish Street
London W1G 7AR, UK
t: +44 (0) 20 7467 7100
f: +44 (0) 20 7255 1472
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9780852939185
ISBN 978 0 85293 918 5

Registered Charity Number: 1097899
+44 (0)207 467 7100

CIF Oil Standard Contract 2016

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CIF Oil Standard Contract 2016

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Hydrocarbon management

Model general terms and conditions for cost,

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Copyright © 2016 by the Energy Institute, London.

ISBN 978 0 85293 918 5

Published by the Energy Institute

1 Applicability of these general terms and conditions . . . . . . . . . . . . . . . . . . . . . . . . . . 8

3 Title and risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

4 Quantity and quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

5 Price and payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

6 Vessel and discharge terminal obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

10 War and ice clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

11 Alternative or additional discharge terminal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

12 Lightering and STS operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

13 Crude oil washing/stripping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

15 Taxes and licences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

17 Notices and communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

18 Recording, retention and monitoring of communications . . . . . . . . . . . . . . . . . . . . . 36

19 Destination and sanctions compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

20 Representations, amendments and waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

21 Rights, powers and remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

23 Health, safety and environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

Annex A Glossary of terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Annex B Confirmation of CIF or CFR sale agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Sister documents are:

PURPOSE OF THESE MODEL TERMS

1 APPLICABILITY OF THESE GENERAL TERMS AND

3 TITLE AND RISK

4 QUANTITY AND QUALITY

4.1 THE EXTENT OF THE SELLER’S OBLIGATION

4.3 PART CARGO LOTS DELIVERED CIF OR CFR

4.4 QUANTITY AND QUALITY CLAIMS

5 PRICE AND PAYMENT

5.1 PRICE AND INVOICING

5.3 PAYMENT DOCUMENTS

5.4 LETTER OF CREDIT

5.6 NON-COMPLIANCE WITH PAYMENT TERMS

5.7 OTHER PAYMENT TERMS

5.7.1 If the Payment Due Date falls:

5.7.2 Each party warrants and represents that:

6 VESSEL AND DISCHARGE TERMINAL OBLIGATIONS

6.1 THE PERFORMING VESSEL

6.2 DISCHARGE TERMINAL

6.2.1 The Buyer shall:

7.1 VESSEL NOMINATIONS

7.2 VESSEL REJECTION OR ACCEPTANCE

7.3 VESSEL’S ESTIMATED TIME OF ARRIVAL (ETA)

7.6 DEMURRAGE RATE

7.7 EXCEPTIONS TO LAYTIME AND DEMURRAGE

7.8 DEMURRAGE CLAIMS

8.1 The discharge of part Cargoes is deemed to be accepted by the Buyer.

10 WAR AND ICE CLAUSE

11 ALTERNATIVE OR ADDITIONAL DISCHARGE TERMINAL

12 LIGHTERING AND STS OPERATIONS

13 CRUDE OIL WASHING/STRIPPING

14.1 FORCE MAJEURE

14.2 DEFAULT AND TERMINATION

15 TAXES AND LICENCES

17 NOTICES AND COMMUNICATIONS

17.4 Notices may not be given by instant messaging.

18 RECORDING, RETENTION AND MONITORING OF