Each contract between a buyer and grower will specify a tolerance on the quantity of the commodity that can be delivered. This means that the terms of the contract will be satisfied once a quantity within the tolerance range of the contract is delivered to the buyer by the grower. There are four different types of contract tolerances - Min/Max tolerance, 5% or 12 mt, +/- 25mt, and +/- 50mt. The definitions of each of these are outlined below.
Min/Max (Nil) Tolerance
Min/Max tolerance requires the grower to deliver the precise quantity outlined in the contract - no more, no less.
5% or 12mt, whichever is less
As is suggested by the name, this tolerance varies depending on the quantity of the commodity that is specified in the contract. For all contracts specifying a quantity of 240mt or less, the range of tolerance of the contract will be plus or minus 5% of the quantity specified. In the instance where the contract specifies a value that exceeds 240mt, then the tolerance will simply be plus or minus 12mt from the base quantity.
+/- 25mt means that the contract will be fulfilled once the delivered amount falls within 25mt (above or below) the quantity outlined in the contract.
+/- 50mt means that the contract will be fulfilled once the delivered amount falls within 50mt (above or below) the quantity outlined in the contract.
It is important to note that the contract will not be fulfilled (and therefore payment cannot be made) unless the tolerance terms are fulfilled.