Know your GTCs – What are the underlying terms and conditions governing your trade?

Standard market terms are valuable – and their widespread use in commodities trading markets recognises that. However, in order to gain the benefits they offer and avoid unintended consequences and the risk of disputes arising, it is critical that parties understand their effect on the trades they are entering and use clear language if they wish to deviate from them. This is particularly true as GTCs are becoming more complex and seek to cover a wider variety of legal and operational matters. Here, we explain why and consider some of the clauses which can give rise to unintended consequences – and disputes.

There is no doubt that having a set of standard market terms, or “GTCs” to govern your physical sale and purchase contracts can be extremely valuable. By avoiding the need to negotiate a variety of different provisions and leaving traders to agree only key commercial terms for their deal, GTCs save huge amounts of time in fast-paced spot trading environments. They also bring a high level of certainty and standardisation across a commodity market, particularly when it comes to the actual operation of the contract.

You would think that an assessment of a party’s rights and obligations in respect of any trade subject to those GTCs therefore should be fairly predictable. However, the assessment can become less certain the further those GTCs limit or qualify any express agreement of the parties. Circumstances can arise in which parties find either that they have contracted for something they did not intend, or that they have agreed express terms which conflict with the underlying GTCs.

The established English law approach to resolving conflict between an expressly agreed term and an incorporated, standard one is that where they can be read together to give effect to both, the Court will aim to do so but where they are in conflict, specifically agreed terms will be given priority over incorporated standard terms and conditions.¹ When such circumstances arise, the solution is not always obvious and it can lead to disputes.

Some of the provisions which can commonly give rise to unintended consequences – and disputes – include:

• Time bar provisions. These provisions, either for the notification of claims or for the commencement of legal proceedings, are some of the most common to cause problems. Such clauses can be brushed over during negotiations but are significant because they have the effect of extinguishing a party’s liability before any relevant statutory time limit would come into effect. Parties can find that they have missed time bars of which they were unaware, or that there is a dispute about whether they have complied with notice provisions in GTCs, particularly where there are conflicting time limits and/or notice provisions in their expressly agreed terms and the incorporated GTCs.
• Quality provisions. The operation of agreed quality parameters and determination is another common source of disputes, in particular in oil trading GTCs. 
   
  In Septo Trading Inc v Tintrade Limited [2021] EWCA Civ 718, a dispute as to quality where the terms of an expressly agreed recap differed from the incorporated BP GTCs, the English Commercial Court found that the terms could be read together but the Court of Appeal overturned this decision, finding that they were in fact in conflict and that in those circumstances, the expressly agreed term prevailed. See our briefing for more information.
   
  In Mercuria Energy Trading SA v Onex DMCC [2026] EWHC 130 (Comm) the English Commercial Court was asked to decide whether a seller was bound to supply oil that complied with “typicals” set out in a sale contract which incorporated the BP GTCs. Here, the Court found there was no inconsistency or conflict between the recap and specially agreed terms and the BP GTCs. The contractual documents could be read together, with the BP GTCs defining or explaining the specially agreed terms, such that the “typicals” identified were non-binding. See our briefing for more information.
• Retention of title provisions. These clauses operate to prevent the passing of title in the goods to the buyer in circumstances where the buyer fails to pay or provide required payment security on time. They are intended to provide the seller with additional security but can have unintended consequences, for example if they give rise to a charge requiring registration which is not carried out, or where they may preclude an unpaid seller from bringing an action for the price.² See our briefing for more information.
• Indicative discharge date provisions. Such provisions are typical for CIF deliveries in many oil trading GTCs, including both BP’s 2015 and Shell’s 2023 GTCs. If in their trade recap or deal confirmation the parties stipulate a range of days during which the seller’s vessel should arrive at the discharge port, those GTCs classify such days as indicative only or limited to “an honest assessment without guarantee,” ³ meaning there is no obligation on the seller to arrive at the discharge port by the end of that range. But what happens if parties subsequently agree to vary the terms of sale from DES to CIF, but “all else is the same”? This scenario gave rise to a recent dispute in the English Commercial Court, which concluded that even though the parties had agreed fixed delivery dates when the contract had been concluded on a DES basis, they stopped being so when it was varied to be on a CIF basis, becoming instead indicative only.⁴

HFW comment

Standard market terms are extremely valuable – and their widespread use in many commodities trading markets recognises that. However, in order to gain the benefits they offer and avoid unintended consequences and the risk of disputes arising, it is critical that parties understand their effect on the trades they are entering and use clear language in their agreements if they wish to deviate from them. This is particularly true in circumstances where GTCs are becoming more complex and seek to cover a wider variety of different legal and operational matters.

Footnotes

1. Septo Trading Inc v Tintrade Limited [2021] EWCA Civ 718
2. Caterpillar (NI) Limited v John Holt & Company (Liverpool) Limited [2013] EWCA Civ 1232
3. Section 25, Shell 2023 GTCs for CIF/CFR Deliveries
4. FinCo International AG v Integra Petrochemicals Europe AG [2026] EWHC 727 (Comm)