Commodity trading can involve large transaction values, multiple intermediaries and complex procedures. Parties should be alert to red flags before committing time, money or sensitive documents.
Common Red Flags
- Unrealistically low pricing
- Pressure to pay upfront fees without clear basis
- Refusal to provide basic company information
- Unverifiable mandate claims
- Poorly drafted or inconsistent documents
- Procedures that change repeatedly
- Parties who avoid direct verification
- Requests for sensitive documents too early
Best Practice
Conduct independent due diligence, verify company details, clarify roles in writing and obtain professional legal or compliance review before proceeding.
Related: Buyer Due Diligence · Seller Due Diligence