Emu Oil Trade Rules

The AEA turned to outside advisers for our industry to be in line with the world market of fats and oils. Dr Frank Orthoefer presented a presentation at our 1999 convention on the important of trade rules. Dr Orthoefer gave a comparison of where AEA Emu oil standards are to where the Fat and Oil industry is. After studying different trade rules, the AEA has formed a starting point for our emu oil trade rules.

Trade rules are designed to give the buyer and seller suggestions on how to form sales contracts, grade oil for further processing, grade oil for specific purposes, standard quantity of net weights, how to handle changes and taxes of contract specifics, terms of
shipment, time of shipments, freight rates, routing, commission or brokerage, arbitration and contingencies. The rules are universal in the trade of different fats and oils. Trade rules are to be reviewed occasional by a review board to insure the rules are up to date with the economy growing times.

AEA has formed three rules to start with. Rule 102 is set up to grade crude Emu oil for further processing. Crude Emu oil needs to meet certain specs. to insure a proper grade after processing. The rule has deviations, for price adjustment of the oil that is off in color and has allow the oil to be bleach to meet a color range.

Rule 103 is designed to defined Emu oil grades for specific purposes. Emu oil has been defined into three different grades, Crude Emu Oil (Grade C), Once Refined Emu Oil (Grade B) and Fully Refined Emu Oil (Grade A). The grades are defined with different specs. The buyer and seller would decide which grade would fit their application. For example: Crude (Grade C) may be used for soap and industrial applications, Once Refined (Grade B) may be used in topical product formulations and Fully Refined (Grade A) may be used topically, or for pharmaceutical or nutritional supplement purposes. Again this rule has taken in account of deviations. The buyer and seller can apply the percentage of deviation to the contract price.

Rule 105 is set up to standardize the unit of weight of Emu oil. The rule gives net weight of five gallon and fifty-five gallon containers.

The rules have been numbered for the purpose to allow more rules in the future.

By setting up different grades, it has allowed AEA to start an oil certification program. Please note: Fully Refined (Grade A) emu oil, being the highest grade of emu oil and having the most stringent specifications, is the only grade of emu oil that is eligible to be certified by the AEA.

The following is a collection of trade rules in regards to trading emu oil

Trade Rules for Crude Soybean compare to Emu Oil

Rule 102

Emu Oil Trade Rule 103

Table for Emu Oil Trade Rules 102 and 103

Rule 104

RULE 105 – QUANTITY

Section 1. UNIT OF WEIGHT – print the pdf document

Emu oil shall be sold on a net weight basis in pounds (kilograms). Unit weight is 7.6 lbs. (3.447 kg)/gallons (e.785 liters).

Section 2. UNIT OF SALE

The unit of sale may, by mutual agreement between Buyer and Seller at time of sale be by the drum, or 5 gallon pails. If sale is made in containers the approximate weight of the containers in net pounds shall be specified.

The following container net weights in pounds will be considered as standard weights unless Buyer and Seller mutually agree on some other agree at the time of sale.

Steel Drum …………………………………………………………… 400 lbs. (181.4 kg)
5 Gallon Pail …………………………………………………………… 38 lbs. (17.235 kg)

Section 3. TBA/future use

Section 4. TBA/future use

Section 5. TOLERANCE

The tolerance shall be one standard deviation above net weight.

RULE 106 – CHANGE AND TAXES

Section 1. CHANGE IN CONTAINER TYPE – print the pdf document.

In the event that delivery is taken in a different container than specified in contract, the Seller’s container differentials prevailing on date of change of specifications shall apply in determining the invoice price of a specific delivery against contract.

Section 2. CHANGE IN OIL TYPE

In the event that Buyer takes delivery of refined oils against a contract written on a “crude basis,” the Seller’s differentials on refined oils prevailing on date of change of specifications shall apply in determining the invoice price of a specific delivery against
contract.

Section 3. CHANGING UNIT DELIVERY

In the event that contract is drawn on a carload basis for direct shipment from plant, and Buyer elects to take delivery in L.C.L. quantities, the Seller’s L.C.L. or warehouse differential over carload on date of specifications shall apply in determining the invoice price of a specific delivery against contract. Any additional transportation costs are for the account of Buyer.

Section 4. CHANGE IN DELIVERY POINT

If Buyer requests shipment to other points than the delivery point specified in contract, any increase or decrease in Seller’s cost is for the account of Buyer.

Section 5. TAXES

Any taxes now or hereafter imposed by the United States Government or by any taxing body upon the manufacture, sale transportation and/or use of Emu Oil are for the account of Buyer.

RULE 107 – TERMS

Section 1. PAYMENT AND SETTLEMENT – print the pdf document

Unless otherwise specified at time of sale, terms of payment on emu oil are to be net cash – sight draft, bill of lading attached. All settlement adjustments are due immediately upon agreement on basis of settlement between final Buyer and original Seller.

Section 2. DISCRETION

Seller reserves the right to restrict the terms of payment, if, in his judgment, the financial responsibility of the Buyer does not warrant shipment on terms originally stated in contract.

Section 3. DEFAULT IN PAYMENT

Failure to accept delivery of or pay for a specified quantity of emu oil covered by contract shall at Seller’s option release Seller from making further deliveries. In case of default in payment when due, the whole sum owed by Buyer shall become due at once.

Section 4. MULTIPLE BILLING AND/OR COMPOSITE SAMPLING

Multiple billing and invoicing of tank cars or tank trucks and/or composite sampling shall be determined by mutual agreement between Shipper and Consignee, and when so determined, shall apply to settlements with all intervening buyers, if any.

RULE 108 – TIME OF SHIPMENT

Section 1. SHIPPING TERMS – print pdf document

Unless the exact shipping date is agreed upon by the Buyer and Seller at time of sale, shipments or forwarding for nearby positions shall be interpreted as follows: In the case of shipments, starting from the date shipping instructions are received by Seller, in the case of forwarding, starting from the date of the trade:

Quick Shipment, or forwarding: Within 2 working days
Immediate shipment, or forwarding: Within 5 working days
Prompt shipment, or forwarding: Within 10 working days
Scattered shipment, or forwarding: Spread uniformly over Contract period

Section 2. CONTRACT DELIVERY PERIOD

On contracts covering specific quantities for shipment during a specified period, shipment is to be made during the month, or months, specified in the contract. However, if the last day of contract period occurs on Saturday, Sunday, or legal holiday, the Seller shall not be deemed in default under these trading rules by reason thereof, if the original bill of lading at the point or origin is dated the next business day.

Section 3. DATE OF SHIPMENT

The date of the bill of lading shall be considered as the date of shipment, or forwarding.

RULE 108A – PERFORMANCE OF CONTRACT AT TIME OF SHIPMENT

Section 1. DELIVERY INSTRUCTIONS – print pdf document

The Buyer shall furnish instructions for shipment, and tank cars in case Buyer’s tank cars are specified, to Seller in ample time to enable Seller to execute order within the period or periods specified in the contract. The seller shall furnish the Buyer loading schedule and point of shipment in ample time to enable Buyer to have Buyer’s tank cars at shipping point within period or periods specified in the contract. Under no circumstances shall the Seller be either expected or required to make physical tender of all or any part of the oil covered by any specific contract for any specified delivery unless Buyer has first furnished written instructions or furnished tank cars for shipment as provided herein. Failure of the Buyer to supply written shipping instructions shall not relieve Seller of the responsibility of performance under the contract unless Buyer fails to supply these shipping instructions within three (3) working days after Seller’s telegraphic request for shipping instructions.

(*) Section 2. FAILURE TO PERFORM ON CONTRACTS COVERING CRUDE AND REFINED.

On all contracts for either crude or refined covering specific quantities for shipment during a specified period, shipment must be made during the specified time. If the Buyer falls to provide shipping instructions, or if the Seller is unable to ship within the period specified, an additional 30-day shipping period may be allowed, by agreement of the parties with the following penalties added to or subtracted from the contract price, depending on which party is in default.

If the Buyer is in default: The Seller assesses a .25 cents per pound charge and the defaulted contract period is extended for an additional 30 days.
If the Seller is in default: The Buyer assesses a .25 cents per pound charge and the defaulted contract period is extended for an additional 30 days.
If both parties have not agreed on additional time:
- If the Buyer is in default: The Seller has the right (within 5 days after giving writtennotice) to sell the oil in the open market for the Buyer’s account. Any market loss or gain will be for the Buyer’s account.
- If the Seller is in default: The Buyer has the right (within 5 days after giving written notice) to buy the oil in the open market for the Seller’s account. Any market loss or gain will be for the Seller’s account.

Failure by Buyer or Seller on any installment of a multi-period contract shall not be a breach of the entire contract.
(*) New Section 2 – Effective Nov. 1, 1999

Section 3. RIGHT OF CANCELLATION

After expiration of contract period, the buyer may not refuse to accept delivery of oil after shipment has been made unless he has previously notified the Seller of his intention to cancel contract if shipment has not been made by a particular working day subsequent to the date of his notification.

RULE 109 – WEIGHTS

Section 1. OFFICIAL WEIGHTS – print pdf document

Seller’s official weights are to govern settlement. Seller shall furnish certified copy of official weights at point of origin on shipments in tank cars and tank trucks. If Seller cannot furnish official weights at point of origin on net contents of tank cars and tank trucks either by means of inside tank scales, track scales or truck scales (gross, tare and net, if track or truck scale weights), Buyer shall have the right to have official weights taken at point of destination, which weights shall govern.

In no case shall railroad or marked tare weighting be considered as official weights. Cost of obtaining official weights shall be for the account of the Seller.

Weights shall be considered official when weighting is done by a State Weighmaster, Board of Trade, Chamber of Commerce, or other recognized public or sworn weightmaster approved or licensed by the supervising organization or by the National Oilseed Processors Association. The National Oilseed Processors Association has the authority to withdraw approval of official weighing licenses, if, upon investigation, it finds that the official weights being supplied, as provided above, are unreliable due to either faulty equipment or fault use of the equipment.

Section 2. OFFICIAL WEIGHT CERTIFICATION

In order to be approved for official NOPA weighing status or to issue official NOPA Weight Certificates, shipper of soybean oil must comply with the following:

(1) On December 1 and June 1 of each year, shipper must furnish a Semi-Annual Scale Report (See Appendix for sample form) to the NOPA office in Washington, D.C., indicating type, capacity, and length of the scales being used for weighing
soybean oil shipments.

(2) Attached to this semi-annual report must be a copy of a scale inspection issued by a qualified independent scale inspector within the six (6) months prior to each semi-annual reporting date. If any approved track, truck, or hopper scale is out of tolerance, NOPA will immediately withdraw official weight status. Tolerance under this rule is defined as within plus or minus 0.1% of a known weight. If hopper scales are involved, continuous weighing is necessary until car is
completely loaded.

(3) Revised weighmaster oath forms must be submitted annually by June 1 of each year to the NOPA office (See Appendix for sample form.)

Section 3. WEIGHT CLAIMS

Wherever a sale is made F.O.B. Buyer’s destination, no allowance for shortage or damage will be made by Seller unless buyer furnishes complete evidence, including railroad inspection report, so as to enable Seller to present complete claim to the carrier.
Weight claims are to be filed as soon as possible, but not later than fifteen (15) days from tank car loading date.

Section 4. VARIATION IN SHIPPING AND DESTINATION WEIGHTS

If the gross weight obtained at destination indicates a discrepancy in the official weights as supplied by the shipper, and inspection shows no indication of leakage in transit, then either party shall have the right to have the tank car reweighed in the presence of representatives of both Buyer and Seller, and the weights so determined shall be used for settlement. Scales to be used for reweighing must be in good working order as supported by certificate of recent examination by authorized examiner. If such certificate is not available, the scale must be tested in the presence of a representative of Buyer and Seller before the car is reweighed. Cost of such weighing shall be for party requesting destination weights, unless the weights taken at destination indicate a discrepancy in excess of 1% of the original invoice weight, in which case the fee for this work shall be charged to the account of the party against whom the decision results. The Buyer shall report the discrepancy to the Seller within two (2) working days from date of receipt of car at Buyer’s plant, and the Seller shall have two (2) working days after receipt of telegram in which to advise the Buyer what action he elects to take. If Seller elects to witness weighing of car, three (3) additional working days will be allowed for such action. In the absence of instructions from Seller, Buyer may proceed with obtaining official destination weights of the tank car, taken in the presence of a disinterested party, which weights will govern settlement.

Section 5. COMPLIANCE WITH SECTION 4

So that Consignee can comply with Section 4, the Shipper shall immediately, after loading or weighing tank cars, forward a copy of the weight certificate, Bill of Lading, or invoice to Consignee’s receiving plant.

RULE 110 – FREIGHT RATES

RULE 111 – ROUTING

Section 1. BUYER’S TANK CARS – print the pdf document

When Buyer furnishes tank cars, Buyer shall have the right to specify routing, providing such routing does not involve additional freight expense to the seller over the lowest rate.

Section 2. SELLERS TANK CARS

When Seller furnishes tank cars, Seller shall have the right to specify routing, with the exception of the delivering carrier, which shall be at the option of the Buyer.

Section 3. DRUM OR BARREL SHIPMENTS

On shipment of barrels or drums, Seller shall have the right to specify routing, with exception of delivering carrier, which shall be at the option of the Buyer.

RULE 112 – TANK CARS AND/OR TANK TRUCKS

Section 1. BUYER’S OR SELLERS’S TANK CARS – print the pdf document

At time of sale, it shall be specified whether Buyer’s or Seller’s tank cars are to be used. If there is failure, then it is understood Buyer’s tanks are to be provided.

Section 2. TANK CAR APPLIANCES

All tank cars furnished either by the Seller or the Buyer must be provided with steam coils and the necessary appliances for their ready loading and unloading in all kinds of weather.

Section 3. INSPECTION OF TANK CARS AND/OR TANK TRUCKS

All tank cars or tank trucks must be inspected by Seller before loading as to cleanliness, condition of steam coils, cap, dome cover and valve, and must be sealed at the dome and the outlet valve when so equipped before shipped.

Seller shall Inspect Buyer’s tank cars or tank trucks before loading and, if found unsatisfactory, notify Buyer by wire. In the event that tank trucks cannot be effectively inspected, they shall not be loaded until Buyer has been notified by telegram, and specifically authorizes such loading. Buyer shall have the option of replacing the tank cars or tank trucks. In case of tank cars or tank trucks which can be effectively inspected, Buyer may request Seller to clean the tank cars or tank trucks at Buyer’s expense, or Buyer shall accept responsibility for the condition of the oil. Any necessary cleaning and repairing shall be performed at the expense of the Buyer on the basis of actual cost. Failure by Shipper to observe the foregoing shall constitute negligence on his part, and shall relive Buyer of responsibility for any and all loss or damage resulting therefrom.

If a loaded Seller’s tank car or tank truck is delivered to Buyer in a faulty condition, immediate request must be made by Buyer for inspection by Seller. Seller shall thereupon either make such inspection or arrange with Buyer to correct fault condition, the seller being liable only to the extent of the expense incurred in correction it.

Section 4. RECONSIGNMENT

Buyer and Seller shall not divert or reconsign tank cars without mutual consent. Any expense incidental to reconsignment or diversion is for the account of the party responsible.

Section 5. UNLOADING TIME

Buyer agrees to empty Seller’s tank cars promptly upon arrival and to return same empty as per Seller’s instructions. Forty-eight (48) hours free time will be allowed for unloading, unless railroad rules permit longer periods at specific export points under export bill of lading. Standard railroad straight demurrage regulations will define when penalty charge for car detention starts. Charges thereafter will be at $4.00 per day for the first four (4) days and $8.00 per day thereafter. For 20,000 gallon jumbo tank cars the penalty charge for car detention shall be $10.00 per day for the first (4) days and $20.00 per day thereafter. Average agreement demurrage rules shall not apply, absence of instructions for return routing. Buyer shall wire Seller for same, and, in case of delayed answer, demurrage and delay shall be for Seller’s account. Buyer cannot be held responsible for failure of carrier to set cars as ordered.

Seller agrees to load Buyer’s tank cars promptly upon arrival, provided cars have not been received at Seller’s plant prior to scheduled loading dates. Forty-eight (48) hours free time will be allowed for loading after scheduled loading dates. Standard railroad demurrage rates shall be paid by Seller to Buyer as penalty for delay in loading tank cars. This penalty is independent of any demurrage due the railroad by the Seller. Seller cannot be held responsible for failure of carrier to set cars as ordered.

RULE 113 – COMMISSION OR BROKERAGE

Print the pdf document

Unless otherwise specifically agreed at the time of sale, the Seller shall pay selling commission or brokerage to agent or broker consummating sale.

The selling commission is understood to have been earned when Seller accepts contract of sale, even though actual delivery is never made. Commission will not be earned or paid when shipment is prevented by an act of the U.S. Government. Commission or brokerage shall not be considered due until delivery has been made, or contract otherwise disposed of.

RULE 114 – ARBITRATION

Print the pdf document

All controversies arising out of contracts made under these Trading Rules or the Breach thereof, unless amicably adjusted otherwise, shall be settled by arbitration in accordance with the Rules, then obtaining, of the American Arbitration Association (AAA)*, except to the extent modified herein, and judgment upon the award rendered may be entered in the highest court of the forum, state or federal, having jurisdiction.

The arbitrators shall be appointed in the following manner: each party to the dispute shall appoint an arbitrator from a list to be prepared by the AAA from the National Panel of Arbitrators. The arbitrator appointed by each party must be: (1) actively engaged in the buying or selling of oilseed products and have been so engaged for a minimum of five years, or (2) retired after at least five years of active engagement in the buying or selling of oilseed products. The party-appointed arbitrators shall select from the AAA’s list a third arbitrator who meets the above requirement. If the party-appointed arbitrators fail to agree on a third arbitrator, the AAA shall appoint a third arbitrator who meets the above requirement.

Note: These amendments to Rule 114 are effective October 1, 1991.

RULE 115 – CONTINGENCIES

Print the pdf document

If in consequence of any act of God, fire, flood, wind, explosion, war, embargo, civil commotion, sabotage, law, an act of the government, or because of labor difficulties, the seller shall be unable to ship or the Buyer unable to receive, any emu oil to be
shipped under a contract existing between them, and if the disabled party delivers notice to the other of that fact within two (2) days and, further, furnishes proof thereof within five (5) days of receipt of the other’s request, provided such request shall be made within a week after receipt of notice of disability, the parties shall have rights and duties as follows:

(1) The disabled party may defer shipments until the disability ceases, but not for more than thirty (30) days next after the disability occurred.

(2) If at the end of the deferred period the parties to the contract have not arrived at an end agreement, and a request for arbitration has not been filed by either party, and the disabled party has not delivered notice that the disability has ceased, the
party not disabled may cancel the contract, and the difference between the contract price and the market price at the close of business on the day the deferred period terminates shall be paid by the buyer to the Seller if the market price is lower, and by the Seller to the Buyer if the market price is higher, whether the Seller or Buyer is the disabled party.

(3) If the parties do not agree that the contingency has or will delay the execution of the contract, then the matter shall be arbitrated in accordance with Rule 114 or these Trading Rules by either party filing submission of the matter with the Clerk of the Tribunal of the American Arbitration Association having jurisdiction. If neither party files a submission for the arbitration within sixty (60) days from the date the contingency occurs, both parties shall be barred from recovering
damages from the other.

(4) The foregoing rule shall not apply in cases of shipments delivered to a carrier prior to the receipt of notice of the disabling event.

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