Skip to main content

Cost, Insurance, Freight Contract (CIF)

                    Cost, Insurance, Freight Contract (CIF)

CIF Contract: CIF stands for “ Cost, Insurance, and Freight” This type of contract is quite popular in Mercantile Transactions. A contract on CIF terms means contract at a price to cover cost, insurance and freight. A CIF contract is one in which the seller agrees to sell the goods at a price which is inclusive of the cost of goods, insurance and freight.

    The essential feature of CIF is the contract performance is satisfied by the delivery of document, and not by the actual delivery of the goods. A CIF contract is however not mere sale of documents, though the buyer has to pay against the delivery of documents. In other words, delivery of documents is only a symbolic delivery of the goods.

     The CIF agreement is usable for transporting goods by sea or inland waterway, Usually the seller goes for this agreement, if they have direct access to the ship, and it is makes easier for seller to load the cargo onto the vessel. It is also usable for non- containerized and bulk cargo.

For Example: A contract is entered into for the sale on C.I.F. terms of specific goods afloat, the seller being at the time in possession of the relative documents which he indorses over to the buyer. Unknown to the parties the carrying vessel had become a total loss before the bargain was struck. Under such circumstances, it was argued in Couturier v. Hastie that the purchaser bought, in fact, the shipping documents, the rights and interests of the vendor; “but the argument was rejected by the House of Lords on the ground that the parties contemplated the existence of the goods.

Thus, although a CIF contracts involves an original shipment of goods, it does not necessarily imply that such goods continue to exist at the time when the contract is made.

 Seller's Responsibilities Includes:

  • Purchasing export licenses for the product

  • Providing inspections of products

  • Any charges or fees for shipping and loading the goods to the seller's port

  • Packaging costs for exporting the cargo

  • Fees for customs clearance, duty, and taxes (for exporting)

  • Cost of shipping the freight via sea or waterway from the seller's port to the buyer's port of destination

  • Cost of insuring the shipment up until the buyer's port of destination

  • Covering the cost of any damage or destruction to the goods

  • The seller must deliver the goods to the ship within the agreed-upon timeframe and provide proof of delivery and loading.

Buyer’s Responsibilities Includes:

  • The buyer only has to pay any customs or other duties, which may impose in a CIF contract. 

  • He is bound to do so even if the goods are destroyed, for he has a remedy against the insurer of goods.

     It's important to note that when shipping internationally, there can be different risk and cost transfer points between the buyer and seller, depending on the type of shipping agreement. Under CIF, the risk transfer is at a different point than the cost transfer. The exact details of the contract will determine when the liability for the goods transfers from seller to buyer.

      Since the seller pays the shipping, freight, and insurance costs until the cargo arrives at the buyer's destination port, the cost transfer occurs when the goods have arrived at the buyer's port. However, the risk transfer occurs from the seller to the buyer when the goods have been loaded on the vessel. Although the seller must purchase insurance, the buyer has ownership of the goods once loaded onto the ship, and if the goods have been damaged during transit, the buyer must file a claim with the seller's insurance company.

     The goods in CIF agreement, the seller assumes the costs and risks associated with transport until delivery, which is when the buyer assumes responsibility. If the goods are not in accordance with the contract then the property does not passes to the purchaser. With this CIF responsibility transfers to the buyer when the goods reach the point of destination.
Labels:

Comments

Post a Comment

Popular posts from this blog

Concept of constitutionalism

  Concept of constitutionalism Who Started Constitutionalism? John Locke - The English Bill of Rights is a foundational constitutional document that helped inspire the American Bill of Rights. Political theorist  John Locke  played a huge role in cementing the philosophy of constitutionalism.  Constitution is a written law which describes the structure of Government, the rules according to which the Govt. must work and the boundaries within which the Govt. must work. Constitutionalism   can be defined as the doctrine that governs the legitimacy of government action, and it implies something far more important than the idea of legality that requires official conduct to be in accordance with pre-fixed legal rules. Constitution constitution is the document that contains the basic and fundamental law of the nation, setting out the organization of the government and the principles of the society. Basic norm (or law) of the state; System of integration and organi...
Post a Comment
Read more

business tips

1. Have a clear vision for your business and strive to achieve it. 2. Hire great people and give them ownership in the company. 3. Provide excellent customer service. 4. Establish yourself as an expert in your field. 5. Develop relationships with key suppliers, customers, and partners. 6. Keep track of your finances and invest in marketing and innovation. 7. Utilize digital platforms to reach a larger audience. 8. Take calculated risks and back yourself. 9. Continuously strive to improve your products and services. 10. Make customer satisfaction your priority.
Post a Comment
Read more

Effects of Non-Registration

 Effects of Non-Registration The Companies Act, 2013 evidently highlights that the main essential for any organization to turn into a company is to get itself registered. A company cannot come into existence until it gets registered. But no such obligation has been imposed for firms by the Indian Partnership Act, 1932. If a firm is not registered it does not cease to be called as a firm, it still exists in the eyes law. Certainly, such a big advantage is not absolute but is subjected to a lot of limitations which we will study further. Non-registration of a firm simply means that the business skips the formalities of incorporation and ceases to exist in the eyes of the law. section 58 of the Indian Partnership Act, 1932 deals with the procedure of incorporation. Likewise, the meaning of non-registration is the exact opposite of registration, meaning when a firm does not go through the procedure of incorporation or start carrying on activities without getting registered. Effects of ...
Post a Comment
Read more