Choose language:

News

17
Typical versus Guaranteed?

Published on 2026/08/17

Maritime Legal Update – August 2026

“Typical” versus “Guaranteed” – why precise drafting of product quality provisions matters

Firm note – commodity sales, shipping and contractual quality disputes

The Law Office actively advises shipowners, shippers, charterers, commodity traders, banks, insurers and international trading companies regarding: international commodity sale contracts, energy trading, charterparties, bills of lading, cargo claims, product quality disputes and international commercial litigation.

The recent Commercial Court decision in Mercuria Energy Trading SA v Onex DMCC [2026] EWHC 130 (Comm) demonstrates how seemingly minor drafting differences between the expressions “typical” and “guaranteed” may determine the outcome of multi-million-dollar commercial disputes.  

1. Introduction – Mercuria v Onex

The dispute concerned the sale of Iraqi high sulphur straight-run fuel oil between: Mercuria Energy Trading SA (buyer) - Onex DMCC (seller).

The contract incorporated BP General Terms and Conditions subject to the qualification “Except as specifically detailed above”.  

2. Background

The contract stated that the product should be “in line with the following typicals” followed by a quality table.

One parameter specified Organic Chlorides (OC): 4.10 ppm.

A separate table identified certain characteristics as guarantees but did not include OC content.

Testing after discharge showed an average OC content of approximately 16 ppm resulting in a substantial reduction in the resale value of the cargo.  

3. The legal issue

The central question was whether the wording “in line with the following typicals” created a contractual obligation requiring the seller to deliver cargo with OC content below 4.10 ppm.

Mercuria argued that “in line with” imposed a contractual obligation.

Onex relied upon the BP GTC definition of typical which expressly stated that it was given without guarantee and did not amount to a contractual warranty.  

4. “Typical” versus “Guaranteed”

The judgment highlights the fundamental distinction.

Typical

A typical value describes the characteristic or expected quality of a product.

It does not normally constitute: a guarantee, a warranty or a binding contractual obligation.

Guaranteed

A guaranteed value represents a contractual commitment that the delivered product will comply with the specified quality standard.

Failure to satisfy a guaranteed specification may amount to breach of contract.

5. Importance of incorporated standard terms

The decision also illustrates the importance of incorporated standard terms.

The BP General Terms expressly defined typical as being provided without guarantee or warranty.  

Accordingly, the incorporated terms played a decisive role in interpreting the parties’ contractual obligations.

6. Importance for commodity trading

The judgment has significant implications for contracts involving: crude oil, refined petroleum products, LNG, LPG, chemicals, and bulk commodities.

Many commodity contracts distinguish between: typical, expected, nominal, target, guaranteed.

Failure to distinguish these concepts precisely may create substantial legal uncertainty.

7. Importance for shipping

Although the dispute arose from a sale contract, its consequences extend well beyond commodity trading.

Product quality directly affects: carriage contracts, cargo claims, bills of lading, cargo valuation, and shipping disputes.

Many cargo disputes originate from uncertainty concerning contractual quality specifications.

8. Practical drafting lessons

The judgment demonstrates that where parties intend to create a legally binding quality obligation they should use clear terminology such as: guaranteed, specification, contractual quality, minimum quality, maximum content.

Conversely, expressions such as: typical, indicative, expected, nominal, may not create enforceable contractual obligations unless supported by clear drafting.

9. Law Office conclusions

The decision in Mercuria Energy Trading SA v Onex DMCC provides an important reminder that careful drafting frequently determines the outcome of commercial litigation.

The principal practical lessons include: precise drafting of quality specifications, clear distinction between “typical” and “guaranteed”, careful review of incorporated standard terms, proper drafting of incorporation clauses, and ensuring that contractual language accurately reflects the parties’ commercial intentions.

For shipping, commodity trading and LNG markets, precise contractual drafting remains one of the most effective forms of legal risk management.