The Vessel Was Nominated. The Seller Rejected It. The Buyer Lost.
Quote from chief_editor on May 22, 2026, 3:30 pmFOB sellers have the right to reject vessels that don't meet contract specifications. Buyers who nominate first and negotiate later face the consequences.
The soybean sale contract was on FOB Santos terms, with a laycan of October 5-15. The buyer nominated a vessel at the end of September: a 30-year-old Panamax bulk carrier, flag of convenience, with a class notation that had been questioned in a recent port state control inspection in another country.
The seller rejected the vessel nomination. Their stated grounds: the vessel did not comply with the sale contract's vessel requirements, which specified vessels not older than 25 years and with no outstanding port state control deficiencies. The buyer argued the PSC inspection was in another country, had been rectified, and the vessel was currently class-compliant. The seller declined to accept the argument and refused to load.
The buyer had 10 days left in the laycan window. In a tight freight market with Brazilian harvest exports peaking, finding an alternative vessel took six days. The substitute vessel cost $320,000 more in freight than the original nomination. The laycan expired before the alternative vessel could arrive. The seller claimed the buyer had failed to present a vessel within the laycan window — a breach of the FOB contract.
The Vessel Requirements Are Part of the Contract
Most FOB commodity sale contracts include vessel requirements clauses that specify acceptable vessel parameters. Common specifications include: maximum age (often 20 to 25 years), classification society (Lloyd's Register, DNV, Bureau Veritas, and equivalents are typically acceptable; some smaller class societies are not), port state control history (no outstanding deficiencies, no detentions within the past 12 or 24 months), and flag requirements (some contracts exclude certain flags associated with lower regulatory compliance).
These requirements exist because the seller bears certain risks related to the loading vessel — terminal damage liability, environmental exposure from vessel incidents, and reputational risk from loading onto vessels involved in accidents or regulatory incidents. A seller loading valuable cargo onto a substandard vessel is not being cautious for its own sake; they are managing real exposures.
A buyer who nominates a vessel without checking it against the contract's vessel requirements is taking a risk that is entirely preventable. Vessel vetting is an established practice — commercial vetting systems like SIRE, CDI, and Q88 exist precisely to provide quick assessments of vessel compliance with various counterparty requirements. A buyer who has not run a vessel vetting check before nomination is nominating blind.
Industry estimates suggest that vessel rejection disputes in FOB commodity trades are disproportionately associated with buyers who are newer to physical commodity chartering — who focus on securing the vessel at the right freight rate without simultaneously checking vessel compliance with the specific requirements of the sale contract. The experienced buyer matches vessel vetting to sale contract requirements before the nomination. The inexperienced buyer nominates and hopes the seller accepts.
The Laycan Window Is Not a Negotiating Tool
The laycan window — the range of dates within which the vessel must arrive ready to load — is a contractual obligation, not a soft target. A seller who has scheduled terminal slots, assembled cargo at the load port, and arranged inspection personnel for a specific period has real costs associated with a buyer who fails to present a vessel within the laycan.
When the buyer's original vessel is rejected and the replacement vessel cannot arrive within the laycan, the seller's legal position is that the buyer has breached the contract. Whether the buyer's breach was caused by the seller's (disputed) wrongful rejection of a valid vessel nomination is a separate question — one that ends up in arbitration if the parties cannot resolve it directly.
The practical outcome in many such disputes is that both parties have costs they cannot recover quickly, and the trade either proceeds on revised terms or terminates with damage claims running in both directions. The legal resolution takes months. The buyer who needed the cargo, and the seller who had the cargo ready, have both incurred costs that better pre-nomination due diligence on vessel requirements would have avoided.
FOB sellers have the right to reject vessels that don't meet contract specifications. Buyers who nominate first and negotiate later face the consequences.
The soybean sale contract was on FOB Santos terms, with a laycan of October 5-15. The buyer nominated a vessel at the end of September: a 30-year-old Panamax bulk carrier, flag of convenience, with a class notation that had been questioned in a recent port state control inspection in another country.
The seller rejected the vessel nomination. Their stated grounds: the vessel did not comply with the sale contract's vessel requirements, which specified vessels not older than 25 years and with no outstanding port state control deficiencies. The buyer argued the PSC inspection was in another country, had been rectified, and the vessel was currently class-compliant. The seller declined to accept the argument and refused to load.
The buyer had 10 days left in the laycan window. In a tight freight market with Brazilian harvest exports peaking, finding an alternative vessel took six days. The substitute vessel cost $320,000 more in freight than the original nomination. The laycan expired before the alternative vessel could arrive. The seller claimed the buyer had failed to present a vessel within the laycan window — a breach of the FOB contract.
The Vessel Requirements Are Part of the Contract
Most FOB commodity sale contracts include vessel requirements clauses that specify acceptable vessel parameters. Common specifications include: maximum age (often 20 to 25 years), classification society (Lloyd's Register, DNV, Bureau Veritas, and equivalents are typically acceptable; some smaller class societies are not), port state control history (no outstanding deficiencies, no detentions within the past 12 or 24 months), and flag requirements (some contracts exclude certain flags associated with lower regulatory compliance).
These requirements exist because the seller bears certain risks related to the loading vessel — terminal damage liability, environmental exposure from vessel incidents, and reputational risk from loading onto vessels involved in accidents or regulatory incidents. A seller loading valuable cargo onto a substandard vessel is not being cautious for its own sake; they are managing real exposures.
A buyer who nominates a vessel without checking it against the contract's vessel requirements is taking a risk that is entirely preventable. Vessel vetting is an established practice — commercial vetting systems like SIRE, CDI, and Q88 exist precisely to provide quick assessments of vessel compliance with various counterparty requirements. A buyer who has not run a vessel vetting check before nomination is nominating blind.
Industry estimates suggest that vessel rejection disputes in FOB commodity trades are disproportionately associated with buyers who are newer to physical commodity chartering — who focus on securing the vessel at the right freight rate without simultaneously checking vessel compliance with the specific requirements of the sale contract. The experienced buyer matches vessel vetting to sale contract requirements before the nomination. The inexperienced buyer nominates and hopes the seller accepts.
The Laycan Window Is Not a Negotiating Tool
The laycan window — the range of dates within which the vessel must arrive ready to load — is a contractual obligation, not a soft target. A seller who has scheduled terminal slots, assembled cargo at the load port, and arranged inspection personnel for a specific period has real costs associated with a buyer who fails to present a vessel within the laycan.
When the buyer's original vessel is rejected and the replacement vessel cannot arrive within the laycan, the seller's legal position is that the buyer has breached the contract. Whether the buyer's breach was caused by the seller's (disputed) wrongful rejection of a valid vessel nomination is a separate question — one that ends up in arbitration if the parties cannot resolve it directly.
The practical outcome in many such disputes is that both parties have costs they cannot recover quickly, and the trade either proceeds on revised terms or terminates with damage claims running in both directions. The legal resolution takes months. The buyer who needed the cargo, and the seller who had the cargo ready, have both incurred costs that better pre-nomination due diligence on vessel requirements would have avoided.