C.I.F Contracts

Paper Summary:

C.I.F. contracts refer to cost, insurance and freight for the international sales of goods where the seller accepts responsibility for arranging insurance. The cost of the insurance is charged in the invoice itself and is prepared by the seller. This paper examines the impact of a C.I.F. contract on determining prices, the exchanging of property and risks and methods outlined under this type of contract. The paper concludes that C.I.F. contracts provide a usable agreement for international trade between different countries and clearly delineates the responsibilities of both the buyer and seller.

From the Paper:

"C.I.F. contracts like any other contract outline the defined role that the buyer and seller play in exchanging money for goods. The key here is that this instrument if used for the international sale of goods and is an effort to make the process easier. It is only one of several incoterms that deal with such matters as which party is responsible for the transport of goods, who pays the insurance and who pays custom fees, etc.

There is an element of risk on both parts from the moment the shipment leaves one port until it reaches its final destination. Having clear documentation in the form of a C.I.F. contract has established standards for efficiently moving goods between countries."

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