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CIF INCOTERMS - Cost, insurance and freight

This term should be used only for sea or inland waterway transport.
CIF-Incoterms-2010-VINCULUM-Customs clearance Vladivostok-GC-IMPORT40 Factory or warehouse of the manufacturer or seller Delivery from the factory or warehouse to the departure terminal Placement of goods at the cargo terminal Placement of goods on board the vessel State border Sea transportation to the port of discharge Placement in a temporary storage warehouse at the port of arrival (unloading) Delivery of goods ready for unloading from the vehicle Cargo recipient's warehouse The area of expenses and responsibility of the seller whenCIF The area of expenses and responsibility of the buyer at CIF The moment of transition of risks at CIF !

"Cost, Insurance and

With the development of the world transport system, the concept of freight has spread to air (English air freight) and land (English land freight) transport.

" >Freight" ("Cost, Insurance and Freight") means that the seller deliversproducton board the vessel or provides the goods delivered in this way.Riskthe loss or damage of the goods passes when the goods are on board the ship. The seller is obliged to conclude a contract and pay the freight and all expenses necessary for the delivery of the goods to the named port of destinationand also conclude an insurance contract covering the risk of loss or damage to the goods during transportation.

The buyer should take into account that according to CIF, the seller is obliged to provide insurance only with minimal coverage. If the buyer wishes to have more protection through insurance, he must either clearly agree this with the seller, or carry out additional insurance at his own expense.

When using CIF, the seller fulfills his delivery obligations not when the goods have reached their destination, but when he transfers the goods to the carrier in a way defined in the chosen term.

This term contains two critical points, since risk and costs are transferred in two different places. The contract always defines the port of destination, but may not specify the port of shipment when the risk passes to the buyer. If the shipping port is of particular interest to the buyer, it is recommended that the parties define it most clearly in the contract.
The parties are also advised to determine the point at the agreed port of destination as accurately as possible, since the costs up to this point are borne by the seller. The seller needs to provide contracts of carriage that accurately reflect such a choice. If the seller under his contract of carriage bears the costs of unloading at an agreed point at the port of destination, the seller does not have the right to demand reimbursement of such costs from the buyer, unless otherwise agreed by the parties.

The seller is obliged either to deliver the goods on board the vessel, or to ensure that the goods delivered in this way are provided at the destination. In addition, the seller must either conclude a contract of carriage or provide such a contract. The indication of the obligation to "provide" takes into account the numerous sales along the chain, which are often used in commodity trading.

CIF may not be appropriate when the goods are transferred to the carrier before they are placed on board the vessel, for example, the goods in containers, which is typical for delivery to" >terminal. In this case, it is more appropriate to use the termCIP.

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

The term CIF is convenient for the importer, because the exporter takes care of the organizational aspects with the delivery of the goods and its insurance. But all these costs, the seller will still include in the price of the goods.

 

Find out what needs to be considered and taken into account when choosing CIF Close the list of CIF actions
  • to clarify in detail the parameters and characteristics of cargo packages (including labeling), this is necessary for subsequent customs clearance of goods;
  • clearly coordinate with the seller the port of delivery of the goods;
  • to determine in the contract the port of shipment of the goods, since the seller fulfills his delivery duties when he transfers the goods to the carrier;
  • to agree with the insurance company the terms of the increased insurance, if necessary (according to CIF, the seller is required to provide insurance with only minimal coverage);
  • obtain permits if necessary;
  • pay customs fees for the import of 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 logistics 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 fees at the port of arrival and this increases the total cost, it is also not recommended to use this term ifcargoit is planned to ship further across Russia in container trains.

 

  

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

A.1.The seller is obliged, in accordance with the contract of sale, to provide the buyer with the goods, a commercial invoice-invoice, as well as any other proof of compliance of the goods with the terms of the contract of sale, which may be required under the terms of the contract.Any document referred to in paragraphs A1-A10 may be replaced by an equivalent electronic record or procedure, if this is agreed by the parties or is customary.
V.1.The buyer is obliged to pay the price of the goods, as stipulated 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 this is agreed by the parties or is customary.

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

A.2.If necessary, the seller is obliged, at his own expense and at his own risk, to obtain an export license or other official permit and to perform all customs formalities necessary for the export of goods.
B.2.If necessary, the buyer is obliged to obtain, at his own expense and at his own risk, an import license or other official permit and perform all customs formalities necessary for the import of goods and their transportation through any country.

3.Contracts of carriage and insurance under CIF conditions

A.3.a) Contract of carriage
The seller is obliged to conclude or ensure the conclusion of a contract for the carriage of goods from a named point of delivery, if it is determined, at the place of delivery to a named port of destination or, if agreed, to any point in such a port. The contract of carriage must be concluded at the expense of the seller, under normal conditions and provide for transportation in the usually accepted direction on a vessel of the type that is usually used for the transportation of the goods sold.
b) Insurance contract
The seller is obliged to carry out cargo insurance at his own expense, corresponding to at least the minimum coverage, as provided for in paragraph "C" of the Institute Cargo Clause (LMA/IUA) or other similar conditions. The insurance contract must be concluded with an insurer or with an insurance company that has a good reputation, and provide the buyer or any person with an insurance interest in the product with the right to claim directly to the insurer.
At the request of the buyer, the seller is obliged, subject to the provision by the buyer of the necessary information required by the seller, to carry out at the buyer's expense such additional insurance as is possible to obtain, for example, as provided for in paragraphs "A" or "B" of the Institute Conditions of Cargo Insurance (LMA/IUA) or other similar conditions, and/or coverage corresponding to Institute Conditions on Military Operations, and/or Institute Conditions on Strikes (LMA/IUA), or other similar conditions.
Insurance must cover at least the price stipulated in the contract of sale plus 10% (i.e. 110%) and be carried out in the currency of the contract of sale.
Insurance must cover the goods starting from the point of delivery, as provided for in paragraphs A4 and A5, and at least up to the named port of destination.
The seller is obliged to provide the buyer with an insurance policy or other proof of insurance coverage.
In addition, the seller is obliged to provide the buyer, at the buyer's request, at his risk and at his expense (if there are costs), with the information that the buyer may need to provide additional insurance.
B.3.a) Contract of carriage
The buyer has no obligation to the seller to conclude a contract of carriage.
b) Insurance contract
The buyer has no obligation to the seller to conclude an insurance contract. However, the buyer is obliged to provide the seller, at his request, with the necessary information to provide additional insurance required by the buyer, as provided in paragraph A3 (b).

4.Delivery and acceptance of goods under CIF conditions

A.4.The seller is obliged to deliver the goods either by placing them on board the vessel or by providing the goods delivered in this way. In either case, the seller is obliged to deliver the goods on an agreed date or in an agreed period and in a manner that is usual for this port.
V.4.The buyer is obliged to accept delivery of the goods as soon as they are delivered in accordance with paragraph A4, and to accept the goods from the carrier at the named port of destination.

5. Transition of risks under CIF conditions

A.5.The seller bears all risks of loss or damage to the goods until the moment of its delivery in accordance with paragraph A4, except for the risks of loss or damage in the circumstances specified in paragraph B5.
V.5.The buyer bears all risks of loss or damage to the goods from the moment of its delivery in accordance with paragraph A4.
If the buyer fails to fulfill the obligation to provide notice in accordance with paragraph B7, he bears all risks of loss or damage to the goods, starting from the agreed date or from the date when the agreed delivery period expired, provided that the goods were explicitly individualized as goods that are the subject of the contract.

6.Cost allocation under CIF conditions

A.6.The seller is obliged to pay:
  • all expenses related to the goods until the moment of its delivery in accordance with paragraph A4, except for expenses paid by the buyer, as provided for in paragraph B6;
  • freight and other expenses specified in paragraph A3 (a), including the costs of loading the goods on board the vessel and any charges in connection with unloading the goods at the agreed port of unloading, which are assigned to the seller under the contract of carriage;
  • insurance costs specified in paragraph A3 (b)
  • if necessary, the costs of performing customs formalities necessary for the export of goods, as well as duties,taxesand the fees paid upon export, as well as the costs of its transportation through any country, if they are imposed on the seller under the terms of the contract of carriage.
V.6.The buyer is obliged, subject to the provisions of paragraph A3, to pay:
  • all expenses related to the goods from the moment of their delivery in accordance with paragraph A4, except, if applicable, the costs of performing customs formalities for the export of goods, as well as taxes, fees and other expenses payable upon export, as provided in paragraph A6 (d);
  • all costs and charges related to the goods during transit prior to their arrival at the agreed port of destination, unless such costs and charges are attributed under the contract of carriage to the seller;
  • unloading costs, including lightening and port charges, unless such costs and fees are borne by the seller under the contract of carriage;
  • any additional costs incurred as a result of the seller's failure to send a notice in accordance with paragraph B7, from the agreed date or from the date of expiry of the agreed period for shipment, provided that the goods have been explicitly individualized as goods that are the subject of the contract;
  • if applicable, the costs of paying taxes, duties and other official fees, as well as customs formalities to be paid upon importation of the goods, and the costs of transporting it through any country, unless such costs and fees are not related to 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 the buyer and seller under CIF conditions

A.7.The seller is obliged to give the buyer a proper notice allowing the buyer to take the measures normally necessary to enable him to accept the goods.
V.7.If the buyer has the right to determine the time for the shipment of the goods and /or the point of receipt of the goods at the named port of destination, he is obliged to give the seller proper notice of this.

8.Documentary proof of delivery under CIF conditions

A.8.The seller is obliged, at his own expense, to provide the buyer with a regular transport document in a timely manner to the agreed destination port.
Such a transport document must cover the goods under the contract and be dated within the agreed shipping period, grant the buyer the right to claim the goods from the carrier at the port of destination and, unless otherwise agreed, allow the buyer to sell the goods during transit by transferring the document to a subsequent buyer or by notifying the carrier.
If the transport document is negotiable and issued in several originals, the buyer must be given a complete set of originals.
V.8.The buyer is obliged to accept the transport document issued in accordance with paragraph A8, if it complies with the contract.

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

A.9.The seller is obliged to bear all the costs associated with the inspection of the goods (quality control, measurement, weighing, counting) necessary for the delivery of the goods in accordance with paragraph A4, as well as the costs of inspecting the goods before shipment, which is prescribed by the authorities of the country of export.
The seller is obliged to ensure the packaging of the goods at his own expense, except in cases when it is usually customary in this branch of trade to ship the goods specified in the contract without packaging. The seller may pack the goods in such a way as is necessary for their transportation, unless the buyer notifies the seller of the specific packaging requirements prior to the conclusion of the contract.Markingthe packaged goods must be carried out properly.
V.9.The buyer is obliged to bear the costs of mandatory inspection of the goods before shipment, except in cases when such inspection is carried out by the order of the authorities of the country of export.

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

A.10.If necessary, the seller is obliged to provide the buyer in a timely manner or assist him in obtaining, at the buyer's request, at his risk and at his expense, documents and information, including security information, which the buyer may need to import the goods and/or transport them to the final destination.
The seller is obliged to reimburse the buyer for all costs and fees incurred by the buyer when receiving or providing assistance in obtaining documents and information, as provided in paragraph B10.
Q.10.The buyer is obliged to inform the seller in a timely manner about the requirements for security information so that the seller can act in accordance with paragraph A10.
The buyer is obliged to reimburse the seller for the costs and fees incurred by him for providing or assisting in obtaining documents and information, as provided for in paragraph A10.
If necessary, the buyer is obliged to provide the seller in a timely manner or assist the seller in obtaining, at the seller's request, at his risk and at his expense, documents and information, including security information, which the seller may need for transportation, export of goods and for its transportation through any country.
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