Incoterms & trade contracts

Quantity tolerance (± %, “more or less”)

A clause in bulk and large-volume contracts accepting that the delivered quantity may deviate from the contract quantity by a set percentage, usually ±5 % or ±10 %. It states whose option the deviation is: the seller’s (MOLSO) or the shipowner’s (MOLOO). Over- or under-delivery within the tolerance is normally invoiced at the contract price, and the letter of credit must carry the same tolerance – otherwise UCP 600 allows only ±5 % for bulk goods.

Related terms

Sales contract

The core document setting out the parties’ rights and obligations in an international raw material sale. It should cover the product and specification, quantity and tolerance, price and currency, Incoterm and named place, shipment period, payment method, quality and quantity determination (inspection), insurance, force majeure, remedies for breach, governing law and dispute resolution. Where the parties’ countries allow it, the UN Convention on Contracts for the International Sale of Goods (CISG) applies unless expressly excluded.

Bill of lading (B/L) B/L

The key document of sea transport, issued by the carrier to show that it has received or loaded the goods. It has three functions: a receipt for the cargo, evidence of the contract of carriage and, when issued “to order”, a document of title. Because whoever presents an original can take delivery, it is the backbone of letters of credit and cash-against-documents deals. A “clean on board” B/L shows the goods were loaded in apparent good order.

Draft survey

A method of calculating the weight of bulk cargo loaded or discharged by reading a ship’s draughts at six points before and after cargo work and correcting for seawater density, ballast, fuel and fresh water. For coal, ores, grain and fertiliser the bill of lading quantity is usually set this way, with an accuracy of about ±0.5 %. Having it performed by an independent surveyor such as SGS, Intertek or Bureau Veritas increases confidence on both sides.

Explained in the trade handbook

Trade handbook