BP's general terms and conditions for sales of crude oil and petroleum products run to 119 pages. Other traders use them as a model: Trafigura builds its own terms on them. One sentence sums up what is at stake: a quantity or quality complaint is admissible only if notified in writing within 45 days of completion of discharge, with supporting evidence. After that, you can claim nothing, even if the lot was bad.
A fuel contract is not judged by its price. It is judged by what it says the day something goes wrong. Here are the clauses to read, in the order in which they matter.
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1. The product specification
This is the most important clause, and the one most often rushed. It should cite a standard (EN 590 for diesel, for example, or the national standard of the country of delivery) and the values that matter to you: sulphur, density, flash point, water content.
Beware of "typical values". BP's general terms say it plainly: typicals do not form part of the product's description. Only the specification limits count. If a number matters to you, write it as a limit.
Our article on the diesel certificate of analysis covers each line and its limits.
2. Quantity and tolerance
A cargo is never loaded to the litre. The contract therefore sets a quantity and a tolerance, as a percentage, stating who chooses it: the seller, the buyer or the vessel. Write the unit too: metric tonnes, or litres at 15 °C. Our article on diesel tonnes to litres explains why a volume without a temperature means nothing.
3. Price and pricing period
A serious fuel price is not a fixed number. It is a formula: a published international quotation plus a premium. The contract should state:
- which quotation (for example Platts, for a given product and region);
- which period: the average of quotations around the bill of lading date, or that of the month before delivery. A UK government framework agreement, for example, uses the average of Platts quotations for the month prior to delivery;
- the premium, fixed for the life of the contract;
- the currency, and the exchange rate if you pay in another currency.
The mechanism is explained in Platts plus premium.
4. Inspection and certificates
The common rule, the one in BP's general terms: quantity and quality are determined at loading by an independent inspector, whose certificates are used for invoicing except in cases of manifest error or fraud. The buyer may send a representative to witness the gauging, sampling and analysis, but not to carry them out, and at the buyer's expense.
Write into the contract who appoints the inspector, who pays (often split equally), and how long samples are retained, so that a referee analysis remains possible in a dispute.
5. Passing of title and risk
This clause says who bears a loss on the way. In BP's general terms, for an FOB sale, risk and property pass to the buyer as the product passes the vessel's permanent hose connection at the loading terminal.
The International Chamber of Commerce's Incoterms 2020 set the general rules:
- FOB, CFR and CIF: risk passes to the buyer on loading on board, at the port of shipment. Under CIF the seller also pays for insurance, but only at minimum cover.
- DAP: risk stays with the seller until the agreed place of destination, goods ready for unloading.
- DDP: the seller also bears import duties and taxes.
6. Laytime and demurrage
For a vessel, the contract sets the time allowed to load or discharge, and the price of each day beyond it: demurrage. BP's general terms impose a strict deadline: for an FOB sale, the seller is not liable unless the demurrage claim is received in writing within 45 days of disconnection of the loading hoses, with supporting documents within 90 days. We put numbers on these costs in fuel cargo hidden costs.
7. Payment
Three things to check:
- The instrument: wire transfer, documentary credit, standby letter of credit. A documentary credit is irrevocable under the ICC's UCP 600 rules, and the bank has a maximum of five banking days after presentation to examine the documents.
- The documents required: at BP, for delivery by vessel FOB, CFR or CIF, the commercial invoice, the full set of three original bills of lading and the original certificates of quantity, quality and origin.
- The due date: the day, the time and the time zone of payment, and what happens if that day is a holiday.
At BP, payment is made without any deduction or set-off: a claim is handled separately, it does not allow you to withhold payment.
8. Claim deadlines
Note every deadline and put it in your calendar on loading day:
| Claim | Deadline under BP's 2015 general terms |
|---|---|
| Quantity or quality | 45 days after completion of discharge, with evidence |
| Quantity loss | no claim if the difference between loaded and discharged is 0.5 % or less |
| Demurrage (FOB sale) | 45 days after hose disconnection, documents within 90 days |
| Legal proceedings | 1 year after delivery |
9. Force majeure
It releases a party when an outside event prevents performance. Read the list of covered events, how they must be notified, and above all what happens if the situation lasts: after how many days may either party terminate? A clause silent on this point leaves you bound to a contract that is no longer being performed.
10. Governing law and forum
BP's general terms choose English law and the High Court in London. This is very common in international trading. What matters for you: being able to enforce a judgment where your counterparty is, and knowing what a dispute would cost. On a first contract with a supplier, a distant and expensive procedure mainly protects whoever can afford to bring it.
Signals that should stop you
- A contract with no numerical specification, or one that cites only "typical" values.
- A twelve-month fixed price with no formula: someone has priced in a risk premium, or will not be able to hold it.
- No independent inspection at loading.
- Full prepayment to a seller who cannot show that it holds the product. Read fuel trading: who really has the product.
Frequently asked questions
Which clauses should I check in a fuel supply contract?
The specification, the quantity and its tolerance, the price formula, inspection, passing of title and risk, demurrage, payment, claim deadlines, force majeure and governing law.
What is the deadline for a fuel quality claim?
The one in the contract. Under BP's 2015 general terms, 45 days after completion of discharge, in writing and with evidence.
When does risk pass to the buyer?
Under FOB, CFR and CIF, on loading on board; at BP, as the product passes the vessel's permanent hose connection. Under DAP, at destination.
Can I withhold payment in a quality dispute?
Not under BP's general terms: payment is made without deduction or set-off, and the claim is handled separately.
What we do
GRACECORP AMD GROUP supplies diesel, gasoline, Jet A-1, CST 180 fuel oil and bitumen, with a specification written into the contract, independent inspection at loading and a certificate of analysis for every lot. The price follows an international quotation plus a stated premium. Payment is by documentary credit or 50 % with the order; for cash and carry collection at the depot, we ask for a purchase order and proof of funds.
Request an offer on WhatsApp or see our fuel offer.
Read next: payment terms in commodity trading: LC and SBLC and fuel supply tender: how to write one.
Sources: BP Oil International, General Terms & Conditions for Sales and Purchases of Crude Oil and Petroleum Products, 2015 edition, version 1.2 (sections 2.1 and 2.2 on inspection, 3.1 on FOB risk and property, 7.1.4 on demurrage, 59.1 and 59.2.1 on quality and claims, 63.1 and 63.3 on payment, 67 on the time bar, 73 and 75.1 on forum and governing law), copy published by Trafigura; Trafigura, general terms based on the BP 2015 terms; International Chamber of Commerce, Incoterms 2020; International Chamber of Commerce, Uniform Customs and Practice for Documentary Credits, UCP 600 (articles 3 and 14); UK government Contracts Finder, fuel supply framework agreement (Platts price element averaged over the month prior to delivery).