Trade contracts
A Trade Contract holds the agreed terms with one counterparty: for a back-to-back trade, one contract for the purchase leg and one for the sale leg. Its workflow takes it from the first draft through queries, deviation approval, finalisation and signature, and its addenda carry any change made after signing into the letters of credit.
To open the list: Contracts › Contracts › All Contracts, or the page of one contract type (for example Commodity Contracts › Purchase Contract).
1. Prerequisites
- The trade (for leg contracts), the counterparty, the commodity.
- Optionally an approved contract template, price formula and laytime rule set.
- Roles: Contracts Executive or Trader (draft, share, amend), Legal Manager (approve deviations, sign, terminate).
2. How a contract is created
- Automatically, when the rule Draft a contract for each leg when a trade is confirmed is switched on: one draft per leg, with the trade's commodity, quantity, tolerance, price, Incoterm, ports, laycan and payment terms, and the contract written back into the trade's leg.
- From the list: New, or New on the page of a contract type.
- By voice or text: Create a purchase contract, Draft a charter party with Meridian Cape. The assistant asks for the type, the counterparty and what the type needs.
3. Fill in the contract
| Section | Fields |
|---|---|
| Header | Title, Contract No. (as the parties number it, for example P/0101/2026), Contract type, Trade, Leg (purchase or sale; set by the type when the type is a leg), Company, Counterparty Type and Counterparty (supplier for a purchase, customer for a sale, set for you), Contract Date, Template |
| Scope (types that are not a leg) | Related contract, Vessel, Insured value, Valid from / to, Limit |
| Cargo and Price | Commodity, Quantity, Unit, Tolerance (+/-), Currency, Base Price per Unit, Price Basis (for example GCV 4,200 kcal/kg ARB), Price Formula; Contract Value = quantity × base price |
| Delivery and Laytime | Incoterm, Load Port, Discharge (for example Any safe port in India), Laycan From / To, Load / Discharge Rate and Rate Unit (MT per WWD, MT per WPD, MT per day, customary quick despatch), Laytime Terms, Demurrage per Day, Despatch per Day |
| Payment, Inspection and Law | Payment Terms, Presentation Days from B/L, Surveyor, Governing Law, Arbitration, Signed On, Signed Copy, Signers' e-mail addresses |
| Quality Specification | One row per parameter: Parameter, Basis (ARB, ADB, DB, DAF, GAR, NAR…), Unit, Typical, Minimum, Maximum, Reject Below, Reject Above, Adjusts Price, Test Standard |
| Clauses | The clause text (from the template, with the contract's values filled in) |
| Documents Required | The documents the buyer will ask for: type, originals, copies, issuer, conditions |
| Addenda and Deviations | Addenda, Deviations from the Other Leg, Needs Deviation Approval, Deviation Justification, Requested Amendments |
Required values depend on the contract type: a contract for a cargo needs the commodity, quantity and base price; a novation needs its related contract; a facility or storage agreement needs its period.
3.1 From a template
Choose a Template on a new contract and save: the template's clauses are copied in, and every {{ variable }} in their text is replaced by the contract's own value (for example {{ base_price }}, {{ quantity }}, {{ load_port }}). A variable the contract does not have stays as written, so you can see it.
3.2 Quality and price
The quality specification is what the surveyor's certificate is checked against. The row with Adjusts Price ticked is the parameter the price formula uses (for example GCV ARB with basis 4,200); Reject Below is the rejection limit (for example 4,000). These drive the commercial settlement.
4. Deviations from the other leg
On every save of a leg contract, the app compares it with the other leg's contract of the same trade and lists each difference in Deviations from the Other Leg:
| Term compared | Severity |
|---|---|
| Commodity, quality basis, load port, bonus cap, rejection limit, price formula, rejection limit of any quality parameter | Critical |
| Quantity, tolerance, Incoterm, laycan, load rate, laytime terms, governing law, arbitration | Warning |
| Demurrage rate, despatch rate | Info |
Each row shows this leg and the other leg. A critical deviation that is not approved (or a clause marked as a deviation) ticks Needs Deviation Approval. An approval stays while the difference stays the same; if the term changes again, it needs approving again.
Actions › Compare with the other leg reruns the comparison and tells you how many deviations there are and whether any needs approval. Changing one leg also refreshes the other leg's comparison.
Example: the sale contract caps the quality bonus at 4,300 kcal/kg; the purchase contract has no cap. Both contracts show Bonus cap (quality): 4300 / none, Critical, and the contract cannot be finalised until Legal approves it.
5. The contract workflow
| Step | Action | Who | Result |
|---|---|---|---|
| Draft | Share with Counterparty | Contracts Executive, Trader | Shared |
| Shared | Record Query or Amendment | Contracts Executive, Trader | Amendment Requested; write what was asked in Requested Amendments |
| Amendment Requested | Share Revised Draft | Contracts Executive | Shared |
| Shared | Request Deviation Approval (only when Needs Deviation Approval is ticked) | Contracts Executive | Pending Deviation Approval; write the Deviation Justification |
| Pending Deviation Approval | Approve Deviation | Legal Manager, not the requester | Shared, ready to finalise |
| Pending Deviation Approval | Reject Deviation | Legal Manager | Amendment Requested, for rework |
| Shared | Finalize (only when nothing needs approval) | Contracts Executive, Legal Manager | Finalized: the agreed terms are locked |
| Finalized | Mark Signed | Legal Manager | Signed (needs the signed copy or a completed e-signature) |
| Signed | Terminate | Legal Manager, not the requester | Terminated |
| Draft | Terminate | Legal Manager, Contracts Executive | Terminated |
5.1 Step by step
- Share the draft. Open the contract, check the terms and clauses, then Print › Trade Contract to preview. Actions › E-mail the draft to the counterparty sends the PDF to the counterparty's e-mail address (or its contacts) and keeps the mail on the contract's activity. Click Share with Counterparty.
- Record queries. When the counterparty asks for changes, click Record Query or Amendment, write the request in Requested Amendments, change the terms as agreed, save, and Share Revised Draft. Every change is kept in the record's history.
- Approve deviations. If Needs Deviation Approval is ticked, write the justification and click Request Deviation Approval. The Legal Manager opens it from their notifications, reads the deviations and the justification, and approves (ticking each deviation as approved) or rejects.
- Finalise. With nothing left to approve, click Finalize. From now on the agreed terms cannot be edited (quantity, tolerance, base price, currency, price formula, Incoterm, load port, laycan, load rate, laytime terms, demurrage and despatch rates, payment terms, presentation days, commodity, contract type, counterparty, related contract, vessel, period, insured value, limit, the quality specification and the clauses). Trying says … is finalized: change … through an addendum.
- Sign. Either attach the scan in Signed Copy, or send it for e-signature (below). Then click Mark Signed; Signed On is set to today if empty. Without a signed copy or e-signature the app refuses: Attach the signed copy (or send it for e-signature) before marking the contract signed.
5.2 E-signature
- Fill Signers' e-mail addresses (one per line), or leave it empty to use the counterparty's address.
- With the contract Finalized, click Actions › Send for e-signature.
- The request goes through PALBON Ekyc to the e-signature service; E-signature request shows its reference. When it completes, Mark Signed.
This needs PALBON Ekyc and Digio Settings with the sandbox or production service enabled; otherwise the app says so and you upload the signed copy instead.
6. Addenda: changes after signing
A price, quantity, tolerance, laycan, load port or payment-terms change after signing is an addendum, never an edit:
- On the signed contract, add a row in Addenda: Addendum (for example ADD I), Effective date, Term (baseprice, quantity, tolerancepct, laycanfrom, laycanto, loadport, paymentterms or other), Old, New, Remarks.
- Keep Status at Draft while it is negotiated. Route it through deviation approval if it is non-standard.
- When the addendum is Agreed or Signed, save. The app:
- changes the contract's term to the new value (once), keeping the old value on the row;
- ticks LC Amendment Raised on the row;
- flags the leg's open letter of credit with Amendment Pending, and says so (ADD I: the purchase letter of credit is flagged for amendment);
- updates the trade leg's price.
- Add the addendum to the contract number if your practice does (for example P/0101/2026 (ADD I)).
The credit is then amended as described in Amendments and SWIFT messages.
7. Hand-offs to the other flows
| To | What | When |
|---|---|---|
| Trade finance | Price, quantity, tolerance, payment terms, documents required; the credit is checked against the contract | When the credit is recorded or drafted |
| Trade finance | Addendum → credit flagged for amendment | Addendum agreed or signed |
| Shipping | Incoterm, laycan, load rate, laytime terms, demurrage and despatch rates | Laytime calculation picks the leg's contract |
| Documents | Surveyor, quality specification, rejection limits | Work orders and document checks |
| Settlement | Base price, price formula, quality specification | Commercial settlement of the leg |
8. Dashboard and reports
The Contracts dashboard shows Contracts in Draft, Contracts Awaiting Signature, Signed Contracts, Trade Contracts by Status and the latest contracts.