What Are Cif Contracts

When are imported goods that cross national borders transferred from the seller`s property to the buyer`s property? Where is the property handed over? Who is responsible for the risks and costs during transportation? The term CIF was developed by the International Chamber of Commerce (ICC) and is one of the so-called “Incoterms”. In the case of FOB contracts, the buyer assumes all responsibility for the goods shipped at the beginning of the trip. English case law, which forms the basis of many international shipping contracts, has shown that it does not matter whether buyers and sellers were aware of the loss of the vessel before they offered the documents; The buyer must pay the price. Therefore, the seller may offer the documents even if he is actually aware of the loss of the vessel or goods at the time of the tender. Therefore, in the event of loss, the buyer receives the documents and not the goods for which it has concluded a contract. Even if the buyer had already paid the price, he cannot demand his return. In addition, under a CIF contract for the sale of goods that have shipped the agreed goods under a bill of lading and have received the appropriate documents, a seller may offer those documents to the buyer, whether or not it is aware of the loss of the goods at the time of the offer. In a CIF contract, the documents that the seller must offer to the buyer contain a bill of lading. However, the contract may provide for the call for tenders for a supply contract or give the seller the opportunity to launch a call for tenders for a supply contract. Since the English case of Re Denbigh Cowan & Co and R Atcherley & Co [1921] 90 LJKB 836, it has been recognized that the mere replacement of a bill of lading by a supply order under the contract does not create an obligation to deliver the actual goods in order to avoid the contract being a genuine CIF contract. However, in another English case, The Julia [1949] AC 293, a contract for the sale of rye “CIF Antwerpen” gave the seller the opportunity to submit bills of lading or supply orders. The seller shipped the rye in bulk and offered a delivery note for less than the entire shipment.

This order was forwarded to the seller`s representative in Antwerp. As a result, it was decided that the contract was not a CIF contract, but a contract for the delivery of the goods to Antwerp. Since the goods were not delivered in this way, there was a complete lack of consideration. Here, it can be said that if the seller in the Julia case had decided to offer a bill of lading, it would have fulfilled its obligations and it would have been a CIF contract. In this context, it can be concluded that, under a CIF contract, the buyer cannot reject the documents and demand the actual goods from the seller. Nor can the seller withhold the documents and put the goods up for auction. In addition, the performance of a CIF contract is fulfilled by the delivery of the documents and not by the actual delivery of the goods by the seller. Therefore, it has been argued that a CIF contract is not a sale of goods, but a sale of documents. Consequently, the characteristic of an ordinary CIF contract must be fulfilled by the delivery of the documents and not by the actual physical delivery of the goods by the seller. On the other hand, it could be argued that, although, in the context of CIF contracts, shipping documents are very important for the performance of those contracts, CIF contracts cannot be regarded as a sale of documents.

Otherwise, the second book, part two, chapter II of the Commercial Code, which deals with “certain types of commercial sales”, including CIF contracts, would not regulate these contracts. FOB contracts release the seller from any liability after the shipment of the goods. Once the goods have been loaded – technically “by passing the rail of the ship” – they are considered to have been delivered to the buyer`s control. When the journey begins, the buyer then assumes all responsibility. The buyer can therefore negotiate with a carrier of his choice a cheaper price for freight and insurance. In fact, some international traders try to maximize their profits by buying FOB and selling CIF. 11. The buyer needs all the documents required under a C.I.F.

contract, in due form and with the necessary notes, so that he can process them before the arrival of the goods by negotiating the documents or obtain immediate possession of the goods after their arrival.. . . .