In conclusion the following comparisons can be made between the two types of contracts. The first is that under a FOB contract the buyer bears the risk of fluctuations in freight rates and insurance premiums and secondly that a CIF contract will always be an export contract.
Read the complete free law essay on CIF and FOB contracts here. We also have lots more free law essays on many other areas of law on our website. Don’t forget, we offer custom essays if you need that extra little help! 0 Comments Leave a Reply. Author. Write something about yourself. No need to be fancy, just an overview.
In a FOB contract, the prime duty of the seller is the delivery of gods on to the ship, whereas in a CIF contract it is the delivery to the buyer of the requisite shipping documents. T The distinction, although difficult, is often important.Joshua and Abraham have signed a FOB contract and according to FOB contract the buyer is accountable for the safety of commodities after shipment. Under FOB contracts it is the duty of vendor that he must surrender commodities as described in the compact such as time of shipment and must hand over the same commodities as explained in the pact.What Is Cif Contracts Law Commercial Essay 1- The seller is under obligation to procure and prepare documents. The seller must procure and prepare shipment. 2- Invoice. In CIF contracts the seller is under a duty to tender an invoice to the buyer.. 3- Insurance. The seller must obtain.
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FOB contract can be described as a flexible instrument. 2 Because, the buyer has to nominate a ship and the seller has to put the goods on board of vessel for account of the buyer and procuring a bill of lading. The important differences between FOB and CIF contract is that, FOB contract specifies the port of loading, however CIF contract.
Buyers Duty Under Cif Contracts Law Commercial Essay. According to case Smyth and Co Ltd v Baily Son and Co Ltd, () CIF contracts summarised by Lord Wright is a type of contracts which is more frequent and the most popular in use than other contract. In cif contracts the price of goods inclusive of cost, insurance and freight.
CIF Contracts. 1-Introduction. An international CIF contract is the preeminent international sale contract on shipment terms. It stands for Cost, Insurance and Freight which effectively describes what the seller should procure for his buyer and what the buyer is paying for.
A CIF contract puts a number of obligations on the seller relating to goods and documents. As regards the goods the same must conform to the description given in the contract. Furthermore, the documents which he is under an obligation to send are required to conform to the contract. And where any breach is made, the same constitutes violation.
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This work provides a comprehensive statement of the law and practice relating to CIF and FOB contracts, the two main international shipping contracts. It examines the two instruments separately. Topics include discussion of the practical impact of the Hamburg Rules, and a detailed overview of many international cases - with over 100 cases added since the last edition.
CIF contract is that when the seller has delivered the goods or provides them afloat. The significant feature of a CIF contract is that performance of bargain is to be fulfilled by delivery of documents and not by actual physical delivery of goods by the seller. On the other hand FOB contract can be described as a flexible instrument.
Under the CIF contract principles, this may constitute fundamental breach of contract and entitle a buyer to terminate the contract and thereby justify non-payment (Bridge, 2007). Alternatively, it is evident that on a strict interpretation of CIF contracts, the tendering of agreed shipping documents (if including the insurance documents) means that the risk in a shipment would have been with.
Rights and Duties of Parties in FOB and CIF Contracts 1.0 Introduction Although governed by the general law of sale, international sales contracts contain trade terms which are not customary in domestic trade and which define many of the obligations of the parties.
The CIF trade term requires the seller to incur greater costs than for an FOB contract, as the seller is obliged to procure insurance and organise the carriage of goods.