COST, INSURANCE AND FREIGHT(... cost plus insurance, freight(... specified port of destination) means that the seller must deliver the goods to the ship to the designated port of destination within the shipment period specified in the contract. Burden all costs and risks of loss of or damage to the goods until they cross the ship's rail, and be responsible for cargo insurance, payment of insurance premiums, chartering or booking, and payment of freight charges from the port of shipment to the port of destination.
According to the 1990 General Principles, the main obligations of the buyer and seller of the CIF contract are as follows:
(1) the principal obligations of the seller
1. Be responsible for the delivery of conforming goods at the port of shipment to the ship bound for the designated port of destination within the date or period specified in the contract and give adequate notice to the buyer;
2. Responsible for processing the export of goods, obtaining an export licence or other authorization;
3. Responsible for chartering or booking and payment of freight charges to the port of destination;
4. Responsible for handling cargo transpoRTAtion insurance and paying insurance premiums;
5. bear all costs and risks for the goods until they have crossed the ship's rail at the port of shipment;
6. Responsible for the provision of commercial invoices, insurance policies and normal transport documents for the goods to the port of destination. If the parties agree to use electronic communications, all documents may be replaced by electronic data interchange information with equal effect.
(2) the main obligations of the buyer
1. Responsible for the payment of the price as stipulated in the contract;
2. Responsible for the import of goods, obtaining import licences or other authorizations;
3. bear all costs and risks of the goods after they have crossed the ship's rail at the port of shipment;
4. Receive the goods delivered by the seller in accordance with the terms of the contract and accept documents conforming to the contract.
In using CIF terms, the following points should be noted:
1. The CIF contract is a "shipping contract", and although it is commonly referred to as "CIF", it refers to the composition of the price and is made up of freight and insurance costs. It does not mean that the seller is also responsible for the risk of the goods before landing. Upon delivery of the goods to the place of shipment as stipulated in the contract, the seller shall no longer be liable for any risk that may arise to the goods.
2. The seller shall charter a charter in time for booking.
3. The seller shall apply for insurance as required by the contract, and the period of commencement and termination of the insurance liability must be consistent with the carriage of the goods. The safeguards for the buyer must come into effect no later than the time when the buyer is required to bear the risk of loss or damage to the goods(i.e. when the goods cross the ship's rail at the port of shipment). The period of the insurance liability must be extended until the goods arrive at the agreed port of destination.
4. The burden of unloading costs is often expressed in the deformation of CIF terms, such as:
CIF liner terms, that is, the cost of unloading is handled according to the liner terms and paid by the party paying the freight(ie, the seller)
CIF ex ship's hold, which means that the buyer bears the cost of lifting the goods from the bilge to the dock;
CIF ex hook(CIF ex hook) means that the seller bears the cost of lifting the goods from the bilge to the side of the ship until the hook is unloaded;
CIF landed means that the seller bears the cost of unloading the goods to the shore of the port of destination.
5. The CIF contract is a symbolic delivery contract. The seller only submits documents that meet the requirements of the contract, that is, equivalent to the delivery of the goods. Even if the goods have been lost or damaged at the time the seller submits the documents, the buyer must still pay in accordance with the documents. However, he can claim compensation from the ship's side on the bill of lading or from the insurance one-way insurance company.
Related Product tags: Trade Terms,CIF