What is the difference between FOB contract and CIF contract?
The major difference between FOB and CIF is when liability and ownership transfer. In most cases of FOB, liability and title possession shift when the shipment leaves the point of origin. With CIF, responsibility transfers to the buyer when the goods reach the point of destination.
What is the difference between CIF and FOB terms?
The main difference between CIF and FOB is the party that is responsible for the goods while they are in transit. With a CIF agreement, the seller is liable for the goods during transit, and with a FOB, the buyer is liable for the goods during transit. Other than that, there is not a major difference between the two.
What is a CIF contract?
Cost, insurance, and freight (CIF) is an international shipping agreement, which represents the charges paid by a seller to cover the costs, insurance, and freight of a buyer’s order while the cargo is in transit. Cost, insurance, and freight only applies to goods transported via a waterway, sea, or ocean.
What is FOB contract law?
Primary tabs. Free on board, often abbreviated as “F.O.B.,” applies to the sale of goods and indicates that purchased property will be placed on board a vessel for shipment at a designated place without expense to the buyer for packing, potage, cartage, etc.
Is CIF more expensive than FOB?
Costs: FOB covers those costs such as ex-factory costs, packing charges, inland transportation charges, documentation and loading charges. CIF price includes free on board and charges of Freight and marine insurance. Shipping space: In FOB, the buyer is liable to book at his own expenses necessary space on board.
Can a CIF contract merely be considered a sale of documents?
A CIF contract whilst it may be deemed by some to be a contract for the sale of goods, from a business point of view, it can be said that the purpose of a CIF contract is not a sale of the goods themselves, but a sale of the documents relating to the goods.
Who is liable in FOB contract?
Key Takeaways. Free on board (FOB) is a trade term used to indicate whether the buyer or the seller is liable for goods that are lost, damaged, or destroyed during shipment. Free on board shipping point indicates that the buyer takes responsibility for loss or damage the moment the goods get to the shipper.
What are the legal implications of FOB contract?
The court mentioned that, “in case of FOB contracts, the goods are delivered free onboard the ship. Once the seller has placed the goods on board, the responsibility of the seller ceases and the delivery of the goods to the buyer is complete. The goods from that stage onwards are at the risk of the buyer.”
Why is a CIF contract sometimes referred to as a sale of documents?
As the effectiveness of the CIF contract depends on the transfer of the documents which give the buyer control, and a right of disposal of the goods, and rights to recover compensation if they are damaged due to the default of the carrier or due to some insured peril it is concluded that this is fact a sale of …
What are the documents required under CIF contract?
Bill of lading : it should be in the normal form. It is the practice of handling credit transaction to call for negotiable bills of landing. This also ensure clean Bill of lading. Insurance documents: This simply an insurance upon items to give some beneficiary over items.
Who pays the freight on FOB?
the buyer
FOB freight collect specifies that the buyer must pay the freight transportation charges when the buyer receives the goods. However, the seller assumes the risk associated with transporting the goods because the seller still owns the goods during transit.
What are the benefits of CIF?
Advantages and Disadvantages of CIF – Cost insurance and Freight. The advantage to the seller is that it can often obtain cheap insurance and then build a larger amount into its selling price. The advantage to the buyer is that it does not have to worry about declaring the shipment to its own insurer.
Is a CIF contract a sale of goods or sale of documents?
A Cost, Insurance, and Freight (CIF) contract of sale is a sale of documents instead of sale of goods.
Who pays for unloading under CIF?
Under the CIF Incoterm, the seller agrees to 1) pay for all the costs related to moving goods to a destination port of the buyer’s choosing and 2) insure the goods until they arrive at that port.
What’s the difference between CIF and FOB?
CIF vs. FOB: What’s the Difference? Cost, insurance, and freight (CIF) and free on board (FOB) are international shipping agreements used in the transportation of goods between buyers and sellers.
What is a CIFF contract?
As Lord Wright observed, C.I.F is a type of contract which is more widely and frequently used that any other contract used where sea carriage is envisaged. Unlike, F.O.B contracts, C.I.F contracts are more attractive to both seller and buyer.
What is a cost of goods (FOB)?
Since there are many variants of F.O.B, the brief concentrates mainly on classic F.O.B. C.I.F stands for cost, insurance, freight. In C.I.F contracts, the price of goods includes freight and insurance costs to the destination point specified in the contract. The courts have defined C.I.F contracts in a number of cases.
What are the types of FOB contracts?
Strict or Classic FOB Contract. FOB “ with additional services”. “Simple” FOB. In the classic FOB contract, the seller is free of any obligation to pay insurance and freight but undertakes to place the export goods board a nominated vessel and port of shipment.