The Silent Profit Killer
Poorly structured contracts and vague, untapped conditions contribute to far greater losses than outright fraud within an industry. Industry estimates in 2022 suggested losses were at least $12 billion when your account for missed opportunities, demurrage, litigation costs, labor inefficiencies, and time wasted. Non-performing contracts will consume your bottom line even when they are not fraud, and even in the best of times.
At Terra Commodities, we help you remove risk from each deal. From enforceable clauses to allowable terms, every contract must be as actionable, enforceable, and assured as possible, and rely upon verified capacity. Furthermore, we regularly monitor execution, allowing us to implement corrective measures before they’re missed execution milestones, particularly in volatile markets. Building a contract is optional; depending on your trading strategy, protecting your exposure with a contract and a hard commercial position could mean life or death.
Why Contracts Fail
Even signed contracts can dissolve if there is a lie behind them.
- The Capacity Lie
Sellers say they have capacity of 500,000 barrels/month but instead they are closer to 80,000. We check:
- Refinery throughput data
- Tank July inventory data
- Historical deliveries
- The Non-Existent Performance Bond
A “guaranteed” performance bond is nothing (worthless) if it is:
- Issued by a non-rated Bank
- Full of vague, unsupported clauses
- No active SWIFT confirmation
- The Bait and Switch
We have seen predatory approaches such as:
- Grade swapping (LSFO , sold as HSFO)
- Port changes made without advisory
- Totals that are widely lower than acceptable shortages
Terra can avoid these ’bad’ acts with you sign on the dotted line.
Terra’s Contract Armor
Good contracts don’t just provide protection, they perform. Here at Terra Commodities we engineer every deal for success.
- The Pre-Signing Audit
Before we sign, we physically confirm:
- Actual product exists (not phantom “floating cargo”)
- Loading infrastructure is in place (not chartered VLCCs with no loading arms)
- The Milestone Map
We stage payments for risk limitation:
- 10% after SGS Inspection
- 30% at load
- 60% confirmed upon receipt of the Bill of Lading
- The Escape Hatch
Our contracts have defined exit clauses:
- Defined force majeure clauses
- Binding quality dispute resolution by a third-party
- Daily penalties for late delivery.
No surprises. No loopholes. Just performance.
A Recent Save
An Indian buyer was on the brink of a $9 million loss when a contracted seller missed the agreed loading window, then had the audacity to demand extra payment for “unexpected storage fees.” The buyer contacted Terra Commodities immediately. Our team stepped in, reviewed the contract, and swiftly enforced the built-in penalty clause. The seller backed down, and the buyer recovered partial costs. Simultaneously, we activated our trusted network and secured an alternative supply, delivered within 72 hours. No disruptions, no additional losses. With Terra, even when deals go sideways, our clients stay protected and operational. That’s the value of real support.
Three Contract Must-Haves
In high-stakes petroleum deals, vague contracts invite costly surprises. That’s why Terra Commodities insists on precise, enforceable terms every time.
- Named Inspection Company
No more “TBD.” We name the independent inspector in advance, ensuring accountability and unbiased results. - Loading Rate Guarantees
No open-ended berthing delays. We include specific loading rates and demurrage protections to keep schedules tight. - Title Transfer Timing
Know exactly when ownership, and risk, transfers. No ambiguity, no disputes.
Our legal experts dissect every clause to safeguard your interests before signatures go on paper.
Don’t gamble with paper. Have our legal team review your contract today.
