Cost, Insurance, and Freight (CIF) is a business term used for buying and selling goods. It indicates that the seller is responsible for preparing the goods for export, arranging water transportation, and purchasing insurance to protect the buyer from shipping damage. The seller also covers the shipping costs to the destination port. After the goods are loaded onto the ship, the seller’s responsibility ends, and the buyer assumes the risk of any damage or loss. CIF is specifically used for sea or inland waterway transportation.
Cost, Insurance, and Freight (CIF) is a business contract term that specifies the obligations of the buyer and seller regarding the delivery, payment, and risk of loss of goods. Under CIF terms, the seller must clear the goods for export, arrange for water transportation, obtain insurance against damage during carriage, and cover the shipping costs to the destination port. Once the goods are loaded onto the receiving ship at the port of shipment, the seller’s delivery is complete, and the risk of loss transfers to the buyer. CIF terms are applicable only for goods transported by sea or inland waterway. For example, if a company in the United States agrees to purchase 1,000 widgets from a company in China under CIF terms, the Chinese company is responsible for clearing the goods for export, arranging sea transportation, obtaining insurance, and covering the shipping costs to the U.S. port of destination. Once the widgets are loaded onto the ship in China, the Chinese company’s delivery is complete, and the risk of loss shifts to the U.S. company. In the event of damage during transit, the U.S. company can file a claim with the insurance company procured by the Chinese company. This demonstrates how CIF terms delineate the responsibilities of the buyer and seller in terms of delivery, payment, and risk of loss of goods.
CIF is a common international trade term that refers to a contractual agreement in which the seller is responsible for arranging and paying for the transportation of goods to a port of destination, as well as obtaining insurance for the goods during transit.
Under CIF terms, the seller is responsible for obtaining insurance for the goods during transit to the port of destination. The cost of insurance is included in the overall price paid by the buyer.
The CIF price includes the cost of the goods, the cost of transportation to the port of destination, and the cost of insurance for the goods during transit.
The buyer’s responsibility under CIF terms is to arrange for the import clearance and pay any applicable customs duties and taxes once the goods arrive at the port of destination.
If the goods are damaged or lost during transit, the seller is responsible for filing an insurance claim to cover the cost of the goods. The buyer should also be notified and may need to provide documentation to support the insurance claim.
Typically, the seller is responsible for obtaining insurance for the goods under CIF terms, and the buyer does not have the option to choose the insurance provider.
The shipping method is typically determined by the seller under CIF terms, and the buyer may not have the option to request a different method of transportation.
The seller is responsible for providing the necessary documentation, including the bill of lading, insurance certificate, and commercial invoice, to the buyer to facilitate the import clearance process.
The buyer has the right to inspect the goods before they are shipped, and the seller is responsible for ensuring that the goods meet the agreed-upon specifications.
If the goods are delayed in transit, the seller and buyer should communicate and work together to resolve the issue. The seller may be responsible for any additional costs incurred due to the delay.
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.
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
- Page URL:https://dlssolicitors.com/define/cost-insurance-and-freight/
- Modern Language Association (MLA):Cost, Insurance, And Freight. dlssolicitors.com. DLS Solicitors. May 09 2024 https://dlssolicitors.com/define/cost-insurance-and-freight/.
- Chicago Manual of Style (CMS):Cost, Insurance, And Freight. dlssolicitors.com. DLS Solicitors. https://dlssolicitors.com/define/cost-insurance-and-freight/ (accessed: May 09 2024).
- American Psychological Association (APA):Cost, Insurance, And Freight. dlssolicitors.com. Retrieved May 09 2024, from dlssolicitors.com website: https://dlssolicitors.com/define/cost-insurance-and-freight/
Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.
All author posts