Bunker traders & suppliers — Are your standard terms and conditions actually part of the contract?

Why standard terms and conditions matter

Well-drafted standard terms and conditions (STCs) provide bunker traders and suppliers with certainty and protection in the areas where disputes most commonly arise:

• Quality and quantity claimsClearly defined sampling procedures, binding testing standards, and strict notice and time-bar provisions for bringing claims.
• Payment and creditExpress payment terms, default interest provisions, rights of set-off, and security mechanisms such as retention of title where bunker is supplied on credit.
• Limitation of liabilityAppropriate exclusions for indirect and consequential losses, together with agreed caps on liability exposure.
• Governing law and dispute resolutionA clear choice of governing law and forum, whether court or arbitration, ensuring parties are not forced to litigate jurisdictional issues before addressing the substantive dispute.
• Operational risk allocationProvisions dealing with force majeure, delivery windows, cancellation rights, sanctions compliance, and the allocation of risk during the delivery process.

Having STCs is not enough — they must be incorporated

This is where many bunker traders and suppliers are caught out. STCs that sit on a website or remain buried in a contract folder will not necessarily bind your customer. Even the most carefully drafted terms offer little protection if they have not been effectively incorporated into the contract.

To maximise the likelihood that your STCs are effectively incorporated and enforceable:

• Reference them before the deal is concludedInclude the STCs as an attachment, or provide a clear link or reference to them, in your quotation, offer, and order confirmation. Do not rely on incorporating them only through an invoice or delivery receipt.
• Make them difficult to overlookInclude a prominent statement in emails and trading communications, such as: "This offer is subject to our Standard Terms and Conditions, available at [link] and a copy is attached in this email."
• Draw attention to onerous provisionsUnusual or particularly burdensome clauses, such as limitations of liability, short contractual time bars, or broad exclusion clauses, may need to be specifically highlighted to increase the prospects of enforceability.
• Watch for conflicting termsWhere a customer's STCs conflict with your own, a "battle of the forms" can arise, creating uncertainty as to which terms govern the contract. Make it clear that your terms apply and respond promptly to any attempt by your customer to substitute their own conditions.
• Keep a clear audit trailRetain the correspondence demonstrating when and how your STCs were provided. This evidence may prove invaluable if incorporation is later challenged.
• Maintain consistencyEnsure all members of your team use the same version of the STCs and review them periodically to reflect changes in regulation, sanctions regimes, market practice, and commercial developments.

Ultimately, successful risk management requires more than simply having robust STCs. Businesses must also ensure that those terms are consistently and effectively incorporated into every transaction.

Recent high-profile insolvencies and the litigation that followed over the meaning and effect of contractual terms in credit supply arrangements serve as a stark reminder of the importance of clear contractual drafting. Those disputes demonstrated that the outcome of a claim can turn on a few words in a contract and on whether the relevant terms were effectively incorporated in the first place.

A small investment of time in ensuring that your STCs are properly drafted, regularly updated, and consistently incorporated into your contracts is far less costly than having to litigate a dispute without the protection they are intended to provide.