CIF Contract

15 Pages 3723 Words

Introduction

C.I.F. stands for "Cost Insurance and Freight" In fact; this contract imposes a variety of duties to the seller. In general this contract is known as a contract for sale and shipment of goods to the agreed destination. As far as the payment is regarded, it must be made against the production of the appropriate documents according to the contract. So, in case of CIF contract the seller undertakes more obligation than the buyer. All these obligations and duties of the both parties will be examined below.

The Duties of the Seller

· To ship the goods according to the contract;
· To arrange for carriage of the goods;
· To arrange insurance;
· To make out invoice to the buyer;
· To tender these documents to the buyer;
However, the seller must ship the goods, which means that the seller is obliged to ship the goods to the appropriate place and on the exact date. At this point the seller has the full responsibility to determine exactly the time and the place, when and where he has placed the goods on the port. Also, he is obliged to nominate the vessel.
Further, the seller has to arrange for carriage of the goods, which means that the buyer does not possess the right to sue the carrier for the breach of the contract (he is not a party of the contract). If the property in the goods has not passed to the buyer then his right to sue for any damages to the goods is not completed. So, this means that in CIF contracts the buyer does not has the right to sue the carriage for the damages.
As far as the documents are regarded, the seller must tender to the buyer an invoice, a clean shipped bill of lading and an insurance policy. These documents are very important because the buyer will pay the price in exchange for the documents, and it is crucial that they are accurate. If the documents are not accurate it will cause delays and other legal problems. Even more important for CIF is that the bill of lading is the ...