CIF Shipment Contract Essay Example | Topics and Well Written Essays - 750 words

CIF Shipment Contract - Essay Example Fundamentally, cost, insurance and freight in a C.I.F Contract are tied to the shipment industry. A C.I.F Contract is quite similar to a Cost and Freight contract, and the same rules apply. Aside from the Cost and Freight features, a C.I.F includes an insurance policy. This covers any risk when goods are being delivered from sellers to buyers (Chua, 2000, 158-159). With all Cost and Freight rules being applied, insurance is the included factor in a C.I.F contract. The insurance factor prevents a seller and buyer facing any loss during transfer of goods. Documents of goods are handed by the seller to the transporter, and then they are handed to the buyer. While this process takes place, the insurance factor remains in effect. Therefore, protection of the goods starts from the time the insurance policy commences up till the time the transporters hand the goods over to the buyer (The Law of International Trade, 2000, 23-27). Usually, such an insurance policy in a C.I.F contract is signed for the period during which the goods are in the care of the seller or the buyer. From this, one can see that the C.I.F. insurance factor is associated with the contract because it is intended for the purpose of shipment. Further more, the insurance is mentioned in the sales contract. The amount that is insured is particularly written in the sales contract, and the amount insured should not be less than 110 percent of the total C.I.F value. This shows that the insurance factor covers everything, and the seller and the buyer will stand no loss if anything happens to the good while being delivered (The Insurance Element in lncoterms CIF and CIP Contracts, 1995, 8-25). Under C.I.F terms, it is a requirement for an exporter to have marine insurance. Obviously, this means that if an exporter does not have marine insurance, s/he would not be able to sign a C.I.F contract. The idea of having marine insurance means that the insurance is specific to the transporter, and provides coverage against loss in case during transportation (The Insurance Element in lncoterms CIF and CIP Contracts, 1995, 8-25). A C.I.F contract appears to be a comprehensive shipment contract because it encompasses all important aspects for transporting goods under international trade. It could be asserted that this contract is a step ahead of the Cost and Freight contract, while variations of a C.I.F contract are seen in the form of C&I contract. In a C&I contract, Cost and Insurance are mentioned in the sales agreement while freight is not included. It can be noted that the marine insurance requirements in a C&I contract and in a C.I.F are the same (The Insurance Element in lncoterms CIF and CIP Contracts, 1995, 8-25). A seller in a C.I.F contract has the responsibility of fulfilling all the contractual requirements. Details such as the exact date and time the goods are to be delivered to the buyer need to be mentioned in the contract. Therefore, it is often said that in a C.I.F contract, a seller has more responsibility than a buyer. The seller has to make sure that everything is in order while the buyer has to receive it as per agreement. If there are any problems with delivery of goods, the buyer is not responsible (The Nature of CIF Contract, 1993, 159-176). However, the seller is on the safe side because s/he is protected due to insurance in the