GAFTA 119 PDF

The Grain and Feed Trade Association, whose standard contract wordings are widely incorporated into sale and purchase contracts between parties around the world in the agri-sector, has reviewed and amended a number of its standard contracts with potentially far reaching effects for traders. First of all, changes have been made to the pre-advice requirements of the nomination clause in Gafta FOB contracts 18, 23, 64, , and effective from 7 September Gafta FOB contract 49 has similarly been revised, with changes effective from 1 September In Ramburs the High Court overturned a decision of the Gafta board of appeal concerning the substitution of a vessel. The contract between the parties in that case was concluded on Gafta 49 terms. The buyers nominated a vessel to sellers on 20 March, but subsequently substituted that vessel on 26 March — the right of substitution being expressly provided for at clause 6 of Gafta

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The hacking of email accounts and the frequency and sophistication of intercepted and fraudulent emails has increased over recent years resulting in payments being made inadvertently to fraudulent bank accounts. V's email records showed that the emails with the invoices were apparently forwarded by V to K on the same day, however what K actually received were emails which appeared to come from V, containing payment instructions for remittance via Citibank NA's New York branch in favour of Citibank NA at its London branch with different account details purporting to identify A as the beneficiary.

For another week or so, A and K exchanged several emails, either via V or directly, dealing with various matters. These emails were manipulated in a similar way to the initial invoices, and the fraud went unnoticed for some time.

K had remitted funds on 5 Nov. Subsequently, on 13 Nov, K emailed A asking for an acknowledgement of receipt of the funds saying that its bank had been told by Citibank New York that the latter had had payment confirmed by the London branch.

Arrangements were made to recall the funds from Ecobank and reallocate them to the Correct Account. It is also not clear from the judgment how this discrepancy came about, but Citibank explained that the difference was due to fluctuations in exchange rates. K challenged the Award in the English Commercial Court on various grounds available under the Arbitration Act, including that:. K was not required to prove that if K had had the opportunity to address its arguments to the Board, the result would necessarily or even probably have been different.

This case emphasises the importance of exercising due diligence before remitting payments. The judgment makes it clear that the responsibility for ensuring payments are made to the correct account lies squarely with the paying party, not the payee. Precautionary measures should be taken to ensure payment into the correct bank account. These may include a clear specification of account details in the contract, and verifying by phone calls instead of emails and checking the authenticity of any subsequent apparent change of account details.

Furthermore, time charter clauses such as 11 d of NYPE given the owner the right to suspend performance immediately once hire is outstanding, without the need to tender any grace period notice. So far there is no proforma charterparty form containing provisions allocating the risk of payment fraud. The fraud is successful mainly due to poor verification and authorisation procedures in companies and can be avoided by tightening internal procedures….

It was impossible to determine where or how the fraudulent manipulations had taken place. The Board proceeded on the basis that it had to identify the allocation of liability based on risk. K should bear the risk of receipt of the incorrect bank details which led to payment into the Fraudulent Account.

The Court rejected this argument, deciding that to fulfil a payment obligation transfer instructions should have been accompanied by the account details notified by the seller. Permission to appeal under s. Preventive measures: Precautionary measures should be taken to ensure payment into the correct bank account. December PDF Version.

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Payment fraud alerts

A sold sunflower meal to K. All notices required to be served on the parties pursuant to this contract shall be communicated rapidly in legible form… A notice to the Brokers or Agent shall be deemed a notice under this contract. After A loaded the cargo, A sent an email to the intermediary broker attaching an invoice directing payment to be made to Citibank NA, New York branch. K made payment to the fraudulent account. A brought arbitration proceedings against K to recover the shortfall. K sought to challenge the award. An obligation to pay in cash, against the background of modern banking practice, permits any commercially recognised method of transferring funds, providing it is equivalent to cash, i.

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QCR Spring 2020: Cyber fraud and its potential implications K v A [2019] EWHC 1118

In very brief terms the issue in dispute was whether or not the buyer had effectively made payment to the seller under the terms of the contract between them. Under a contract prepared by an intermediary broker, A agreed to sell and K agreed to buy a consignment of sunflower meal, FOB. The contract incorporated Gafta Form The requisite document in this instance was the commercial invoice. The consignment was loaded onto a vessel and this constituted good delivery.

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GAFTA: “Certificate final terms” – Caution with own agreements

Arbitration Act , Arbitration proceedings , Challenges to awards , Court intervention , Cybersecurity. The Court concluded that the Board may have reached a different view if K had had an opportunity to address the argument, and remitted the Award back to the Tribunal. After discovery of the fraud, a payment shortfall arose out of complications in the eventual payment of the purchase price to A. A sought to recover the shortfall in the arbitration. The case shows the importance of understanding where the risk passes under a contract for fraud or hacking of the type which can interfere with performance by the parties of their contractual obligations. The parties contracted for the delivery by A of meal to K under GAFTA Form the Contract After A loaded the goods onto a vessel which it was agreed constituted good delivery , A sent to V two emails attaching an invoice and a corrected invoice with a new date, each stating the correct contract price and providing bank account details for payment the correct A account.

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