Carriage and insurance paid to (CIP) is a business contract term for purchasing and selling goods. It entails the seller’s responsibility for exporting the goods, obtaining insurance to safeguard the buyer against transportation damage, delivering the goods to the buyer’s chosen carrier, and covering the transportation expenses to the specified destination. After the goods are handed over to the carrier, the seller’s obligations cease, and the buyer assumes the risk of any potential loss or damage. The goods can be transported using any mode of transportation.
Carriage and insurance paid to (CIP) is a term used in international trade to define the obligations of both the buyer and seller regarding delivery, payment, and risk of loss. Under CIP terms, the seller is responsible for exporting the goods, obtaining insurance for transportation damages, delivering the goods to the buyer’s chosen carrier, and covering the transportation costs to the specified destination. Once the goods are handed over to the carrier, the seller’s responsibility ends, and the risk of loss transfers to the buyer. For instance, if a US company purchases goods from a Chinese supplier under CIP terms, the supplier takes on the responsibility of exporting the goods, obtaining insurance, and delivering them to the carrier. On the other hand, the buyer is accountable for paying for the goods, any import duties, and any expenses incurred upon arrival at the destination. In this scenario, the CIP terms clearly outline the respective responsibilities of the buyer and seller. The seller ensures the goods are delivered to the carrier and insured against transportation damages, while the buyer covers the costs and any associated expenses upon arrival. If any damages occur during transportation, the insurance obtained by the seller would cover the incurred costs.
CIP is an international trade term that indicates the seller is responsible for delivering the goods to a specified destination, covering the cost of transportation and providing insurance against the risk of loss or damage during transit.
The seller is responsible for arranging and paying for transportation of the goods to the agreed destination under CIP.
Under CIP, the seller is required to provide insurance coverage against the risk of loss or damage to the goods during transit. The insurance coverage should be at least equivalent to the value of the goods.
Yes, the buyer has the option to request additional insurance coverage beyond what is provided by the seller under CIP. However, any additional costs incurred for such coverage would typically be the responsibility of the buyer.
If the goods are lost or damaged during transportation under CIP, the seller is responsible for filing an insurance claim and reimbursing the buyer for the value of the goods. It is important for both parties to have clear communication and documentation regarding the condition of the goods at the time of delivery.
No, under CIP, the seller has the right to choose the carrier and mode of transportation. However, the seller must ensure that the chosen carrier is reliable and capable of delivering the goods to the agreed destination.
The buyer’s main responsibility under CIP is to accept the goods at the agreed destination and provide any necessary documentation for customs clearance. The buyer should also inspect the goods upon delivery and notify the seller of any issues or damages within a specified timeframe.
Yes, the buyer can request a change in the destination under CIP. However, any additional costs or risks associated with the change in destination would typically be the responsibility of the buyer.
Yes, the seller can use their own insurance policy to fulfill the insurance requirement under CIP. However, the insurance coverage should still meet the minimum requirements specified in the contract.
The insurance coverage provided under CIP typically covers most risks of loss or damage during transit. However, there may be certain limitations or exclusions specified in the contract, such as acts of war, natural disasters, or intentional misconduct. It is important for both parties to review and understand these limitations before entering into the agreement.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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