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  • CIF - Cost, insurance and freight

CIF INCOTERMS - Cost, Insurance and Freight

  • COST INSURANCE AND FREIGHT [... named port of destination]
  • COST, INSURANCE AND FREIGHT [... destination port name]
This term is to be used only for sea or inland waterway transport.
CIF-Incoterms-2010-VINCULUM- Customs clearance Vladivostok-GK-IMPORT40Factory or warehouse manufacturer or sellerDelivery from the factory or warehouse to the departure terminalPlacement of goods on the cargo terminalPlacing goods on boardState borderSea transportation to the port of dischargeAccommodation at the temporary storage at the port of arrival (unloading)Delivery of goods ready for unloading from the vehicleConsignee WarehouseSeller’s cost and responsibility area for CIFThe cost zone and the responsibility of the buyer when CIFMoment of risk transfer when CIF!

"Cost, Insurance and Freight"(" Cost, Insurance and Freight ") means that the seller supplies product on board the vessel or provide the goods so delivered. Risk loss or damage to the goods passes when the goods are on board. The seller is obliged to conclude an agreement and pay the freight and all expenses necessary for the delivery of the goods to the named port of destination. and also to conclude an insurance contract covering the risk of loss or damage to the goods during transportation.

Buyer should be aware that according to CIF the seller is obliged to provide insurance only with minimal coverage. If the buyer wants to have more protection through insurance, he needs to either clearly coordinate this with the seller, or implement additional insurance at his own expense.

If you are using CIF the seller fulfills his delivery obligations not when the goods have reached their destination, but when he delivers the goods to the carrier in the manner specified in the chosen term.

This term contains two critical points, since the risk and costs pass in two different places. The contract always determines the port of destination, but may not specify the port of shipment when the risk passes to the buyer. If the port of shipment is of particular interest to the buyer, it is recommended that the parties identify it most clearly in the contract.
The parties are also advised to determine as precisely as possible the point at the agreed port of destination, as the costs to that point are borne by the seller. The seller needs to provide contracts of carriage that accurately reflect this choice. If the seller, under his contract of carriage, bears the costs of unloading at the agreed point in the port of destination, the seller is not entitled to demand compensation from the buyer for such costs, unless otherwise agreed by the parties.

The seller must deliver the goods either on board, or ensure that the delivered goods in such a way at the destination. In addition, the seller is obliged to enter into any contract of carriage or to ensure such an agreement. Pointing to the obligation to "provide" takes into account the numerous sales chain, which are used frequently in commodity trading.

CIF It may not be appropriate when the goods are handed over to a carrier before being placed on board a ship, for example, goods in containers that are typical for delivery to terminal. In this case, it is more appropriate to use the term CIP.

CIF requires the seller to perform customs formalities for export, if applicable. However, the seller is not obliged to carry out customs formalities for importation, pay import duties or perform other customs formalities upon importation.

Term CIF It is convenient for the importer, because the exporter takes on organizational issues with the delivery of the goods and their insurance. But all these costs, the seller will still include in the price of the goods.

 

Learn what you need to consider and take when choosing CIF Close the list of actions for CIF
  • to clarify in detail the parameters and characteristics of the packages (including labeling), this is necessary for the subsequent customs clearance of goods;
  • clearly coordinate with the seller the port of delivery of the goods;
  • define in the contract the port of shipment of the goods, since the seller fulfills his obligations for delivery when he transfers the goods to the carrier;
  • agree with the insurance company the terms of the increased insurance, if necessary (according to CIF the seller must provide insurance only with minimal coverage);
  • obtain permits, if necessary;
  • pay customs charges for importing goods;
  • to carry out customs clearance of goods;

This list is not complete and depends on the specific case, under these conditions of delivery, the seller's logisticians may give a lower freight cost compared to, for example, FOB, but it may happen that in the end, due to the fact that the buyer pays various port charges at the port of arrival and this increases the total cost, it is also not recommended to use this term if cargo It is planned to ship further across Russia in container trains.

 

  

1. General obligations of the seller and the buyer under the conditions CIF

A.1.The seller is obliged, in accordance with the contract of sale, to provide the buyer with the goods, the commercial invoiceinvoice, as well as any other proof of conformity of the goods to the terms of the contract of sale, which may be required under the terms of the contract. Any document referred to in A1-A10 may be replaced by an equivalent electronic record or procedure, if agreed by the parties or is common.
V.1. The buyer is obliged to pay the price of the goods, as provided for in the contract of sale. Any document referred to in paragraphs B1-B10 may be in the form of an equivalent electronic record or other procedure, if agreed by the parties or is common.

2.Licenses, permits, security controls and other formalities under the conditions CIF

A.2.If required, the seller must, at his own expense and risk, an export license or other official authorization and carry out all customs formalities necessary for the export of goods.
V.2.If required, the buyer must obtain at his own expense and risk import license or other official authorization and carry out all customs formalities for the import of goods and its transportation through any country.

3. Contracts of carriage and insurance under conditions CIF

A.3.a) Contract of carriage
The seller must contract or procure the conclusion of transport of goods from a named point of delivery of the contract, if it is determined at the point of delivery to the named port of destination or, if agreed, to any point in a port. The contract of carriage must be made by the seller, on the usual conditions and provide for carriage by generally accepted direction of the ship of the type normally used for the transport of goods sold.
b) Contract of insurance
The seller must at his own expense carry cargo insurance, corresponding to at least the minimum coverage, as required by paragraph "C" Institutskaya terms of cargo insurance (Institute Cargo Clause) (LMA / IUA) or other similar conditions. The insurance contract must be concluded with an insurer or an insurance company having a good reputation, and provide the purchaser or any person having an insurable interest in the goods, the right to claim directly against the insurer.
By the purchaser, the seller is obliged, provided that the buyer the necessary information required by the seller to carry the buyer's expense such additional insurance, which is possible to get, for example, as provided in paragraphs "A" or "B" Institutskaya terms of cargo insurance (LMA / IUA) or other similar terms, and / or coating the corresponding Institutsky terms of military action, and / or university terms of strikes (LMA / IUA), or other similar conditions.
Insurance should cover, at a minimum, provided for in the sales contract price plus 10% (ie 110%) and carried out in the currency of the contract of sale.
Insurance should provide goods ranging from the delivery of the item, as provided for in paragraphs A4 and A5 and, at least to a named port of destination.
The seller must provide the buyer with the insurance policy or other evidence of insurance cover.
In addition, the seller must provide the buyer, at the buyer's request, risk and expense (if any expenses) information that may be needed to the buyer to provide additional security.
V.3.a) Contract of carriage
The buyer has no obligation to the seller to conclude a contract of carriage.
b) Contract of insurance
The buyer has no obligation to the seller to conclude a contract of insurance. However, the buyer must provide the seller, at his request, the necessary information to provide additional insurance required by the buyer, as provided for in paragraph A3 b).

4. Delivery and acceptance of goods under conditions CIF

A.4.The seller must deliver the goods, either by placing it on the board or by providing goods delivered that way. In this and in another case, the seller must deliver the goods on the date or within the agreed period and in a manner that is typical for this port.
V.4.The buyer must take delivery of the goods as soon as they have been delivered in accordance with paragraph A4, and take the goods from the carrier at the named port of destination.

5. Transfer of risks under conditions CIF

A.5.Seller shall bear all loss or damage to the goods until it is delivered in accordance with paragraph A4, with the exception of the risks of loss or damage in the circumstances referred to in paragraph B5.
V.5.The buyer bears all risks of loss or damage to the goods from the moment of delivery in accordance with paragraph A4.
At default by the buyer obligations to provide notification in accordance with paragraph B7, he shall bear all risks of loss or damage to the goods from the agreed date or the date on which expired the agreed delivery period, provided that the goods were explicitly individualized as a commodity, which is the subject agreement.

6 Allocation of costs under conditions CIF

A.6.The seller must pay:
  • all expenses related to the goods until the time of their delivery in accordance with paragraph А4, with the exception of expenses paid by the buyer, as provided for in paragraph Б6;
  • freight and other expenses specified in A3 a), including the costs of loading the goods on board the ship and any fees in connection with unloading the goods at the agreed port of discharge, which are charged to the seller under the contract of carriage;
  • insurance costs specified in paragraph A3 b)
  • if necessary, the cost of the customs formalities required for the export of goods, as well as duties, taxes and fees paid upon export, as well as the costs of its transportation through any country, if they are charged to the seller under the terms of the contract of carriage.
V.6.The buyer must, subject to the provisions of paragraph A3, pay:
  • all expenses related to the goods from the moment of their delivery in accordance with paragraph А4, except, if applicable, the cost of customs formalities for the export of goods, as well as taxes, fees and other expenses payable during export, as provided for in paragraph А6 d);
  • all costs and charges relating to the goods during transit prior to their arrival at the agreed destination port, unless such costs and charges are not applicable to the seller under the contract of carriage;
  • the cost of unloading, including lightering and port charges, unless such costs and charges are not borne by the seller under the contract of carriage;
  • any additional costs incurred due to the seller’s failure to send the notice in accordance with paragraph 7, from the agreed date or from the date of expiration of the agreed period for shipment, provided that the goods were explicitly individualized as goods subject to the contract;
  • if applicable, the costs of paying taxes, duties and other official charges, as well as the performance of customs formalities payable when importing goods, and the cost of transporting it through any country, unless such costs and charges are not included in the contract of carriage to the seller ;
  • costs of additional insurance provided at the request of the buyer, as provided in paragraphs A3 b) and B3 b).

7.Notification to buyer and seller under conditions CIF

A.7.The seller must provide the buyer proper notice, allowing the buyer to take steps normally required in order that he may carry out acceptance of the goods.
V.7.If the buyer is entitled to determine the time for shipment and / or the point of receipt of the goods at the named port of destination, he must account to the seller due notice thereof.

8.Documentary proof of delivery under conditions CIF

A.8.The seller must at his own expense in a timely manner to provide the buyer with the usual transport document to the agreed port of destination.
Such transport document should cover the goods under the contract and be dated within the agreed period of shipment, to provide the buyer the right to claim the goods from the carrier at the port of destination and, unless otherwise agreed, enable the buyer to sell the goods during transit through the transfer of subsequent buyer or by notification to the carrier .
If the transport document is negotiable and issued in several originals, a buyer must be a full set of originals.
V.8.The buyer must accept the transport document issued in accordance with paragraph A8 if it corresponds to the contract.

9.Checking, packaging, labeling and inspection of goods under conditions CIF

A.9.The seller must pay all costs associated with checking (checking quality, measuring, weighing, counting) which are necessary for the delivery of goods in accordance with paragraph A4, as well as the costs of inspection of goods before shipment, which is prescribed by the authorities of the exporting country.
The seller must, at his own expense, ensure the packing of the goods, unless it is customary in the industry to ship the goods specified in the contract in unpacked packaging. The seller may pack the goods in such a way as is necessary for his transportation, unless the buyer informs the seller about the specific packaging requirements before entering into the contract. Marking packaged goods must be properly implemented.
V.9.The buyer must pay the costs for the mandatory inspection of goods prior to shipment, except when such inspection is carried out by order of the authorities of the exporting country.

10. Assistance in obtaining information and related costs under the conditions CIF

A.10.If need be, the seller is obliged to provide the purchaser or to assist him in obtaining, at the request of the buyer, at his risk and expense, documents and information, including important safety information, which may require the buyer to the goods import and / or transport it to the final destination.
The seller is obliged to compensate the buyer for all costs and charges incurred by the buyer in obtaining or providing assistance in obtaining documents and information as provided for in paragraph B10.
V.10.The buyer must notify the seller in a timely manner the requirements with regard to safety information, so that the seller could act in accordance with paragraph A10.
The buyer must reimburse the seller incurred by him costs and charges for providing or rendering assistance in obtaining documents and information as provided for in paragraph A10.
If required, the buyer is obliged to provide the seller or facilitate in the seller receiving, at the request of the seller, at his risk and expense, documents and information, including important safety information, which may require the seller to transport, export of goods and for their transport through any country.
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