Explanation Of Financial Terms: Cost, Insurance And Freight

"Cost, insurance premium"

The seller must pay the freight and charges necessary to deliver the goods to the named port of destination, but the risk of loss or damage to the goods after delivery and any additional expenses due to various events shall be pferred from the seller to the buyer.

However, under the CIF condition, the seller must also handle the marine insurance for the buyer's risk of loss or damage in pit.

Therefore, an insurance contract is made by the seller and the insurance premium is paid.

The buyer should note that the CIF term only requires the seller to insure against the minimum insurance coverage.

If the buyer needs a higher insurance risk, he or she will need to make an explicit agreement with the seller or make additional insurance arrangements on his own.

The CIF term requires the seller to clear the goods for export.

This term applies only to ocean and inland waterway pport.

If the parties do not intend to deliver the goods across the ship, CIP terminology should be used.

A seller's obligation

B buyer's obligation

A1 provide goods conforming to the contract.

The seller must provide goods and commercial invoices or equivalent electronic messages that conform to the sales contract, and any other documents that may be required by the contract to prove that the goods are in conformity with the contract.

B1 payment price

The buyer must pay the price according to the sales contract.

A2 licenses, other permits and procedures

The seller must obtain any export licence or other official permission at his own risk and expense and, when he is required to go through the customs formalities, handle all the customs formalities necessary for the export of the goods.

B2 licenses, other permits and procedures

The buyer must obtain any import license or other official permission at his own risk and expense and, when he is required to go through customs formalities, handle all customs formalities for the importation and pit of goods from other countries.

A3 pport contract and insurance contract

A) pport contract

The seller must, at his own expense, enter into a contract of carriage on the usual terms and conditions, and, through the usual route, ship the goods to the designated port of destination by means of a seagoing vessel (or a vessel which is suitable for inland river pportation) normally provided for in the contract of carriage.

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B) insurance contract

The Seller shall, in accordance with the contract stipulations, obtain the insurance of the goods at his own expense and provide the buyer with an insurance policy or other insurance evidence, so that the buyer or any other person who has insurable interest in the goods shall have the right to claim against the insurer directly.

An insurance contract should be concluded with a reputable insurer or an insurance company. When there is no reverse agreement, it should be insured in accordance with the minimum cargo insurance clauses of the association cargo insurance clauses (London insurers Association) or other similar clauses.

The term of insurance shall be stipulated in accordance with B5 and B4.

At the buyer's request and at the buyer's expense, the Seller shall increase risks of war, strike, riot and civil commotion, if it can be insured.

The minimum insurance amount shall include the contract price plus 10% (110%), and the contract currency shall be adopted.

B3 pport contract and insurance contract

A) contract of carriage: no obligation.

B) insurance contract: no obligation.

A4 delivery

The seller must deliver the goods to the ship at the port of shipment, within the agreed date or within the agreed time limit.

B4 take delivery of goods

The buyer must receive the goods when the seller has delivered the goods in accordance with the provisions of A4, and shall receive the goods from the carrier at the designated port of destination.

A5 risk pfer

Except for those specified by B5, the seller must bear all risks of loss or damage to the goods until the goods pass the ship's side at the port of shipment.

B5 risk pfer

The buyer must bear all risks of loss of or damage to the goods after passing the ship's side at the port of shipment.

If the buyer fails to give notice to the seller in accordance with the provisions of B7, the buyer shall bear all risks of loss or damage to the goods from the date of the agreed date of shipment or the date of shipment expires, provided that the goods have been formally placed under the contract, that is, clearly defined or otherwise determined as goods under the contract.

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A6 cost partition

In addition to the provisions of B6, the Seller shall pay all the expenses relating to the goods until the shipment has been made in accordance with the provisions of A4, and the freight and all other expenses stipulated in accordance with the provisions of A3a, including the loading charges of the goods and the insurance expenses stipulated in accordance with A3b; and any unloading costs at the agreed port of discharge, paid by the seller under the contract of carriage, and the customs formalities for the export of the goods and all duties, taxes and other charges payable at the time of export, as well as the cost of the goods delivered by the seller in pit from other countries under the contract of carriage.

B6 cost partition

The contract of carriage shall be paid by the seller, and the unloading charge, including freight and dock charges, unless the expenses are paid by the seller according to the contract of carriage, and if the buyer fails to give notice to the seller in accordance with the provisions of the B7, all the additional expenses incurred by the goods from the date of the agreed shipment date or the date of shipment expires, but shall be clearly defined or otherwise determined as the goods under the contract until the date of the agreed shipment date or the date of shipment expires; and all customs duties, taxes and other charges, and the costs of customs handling and the pit from other countries when required for customs formalities, unless these costs are included in the contract of carriage. Except for A3a), the buyer must pay all the expenses from the time of delivery in accordance with the provisions of A4, and all costs until the time of arrival of the goods until the port of destination reaches the port of destination.

A7 notify buyer

The seller must give the buyer sufficient notice that the goods have been delivered in accordance with A4 and any other notice required, so that the buyer can take the usual necessary measures for the delivery of the goods.

B7 notify seller

Once the buyer has the right to decide the time and / or destination port for shipment, the buyer must give the seller sufficient notice.

A8 delivery documents, pport documents or equivalent electronic messages.

The Seller shall, at any cost, provide the buyer without delay with the usual pport document indicating the port of destination.

This document (such as negotiable bill of lading, non negotiable sea waybill or inland waterway pport document) must contain the contract goods, and the date shall be made within the agreed time of shipment so that the buyer can obtain the goods from the carrier at the port of destination, and unless otherwise agreed, the buyer may sell the goods in pit to the buyer through the pfer of the documents (negotiable bill of lading) or by notification to the carrier.

If there are several original copies of the pport document, a full set of original copies should be provided to the buyer.

If the seller and the Buyer agree to communicate electronically, the documents mentioned in the preceding paragraph can be replaced by the equivalent electronic data interchange (EDI) message.

B8 delivery documents, pport documents or equivalent electronic messages.

The buyer must accept the pport document provided in accordance with A8, if the document is in conformity with the contract stipulations.

A9 checking, packing, marking

The seller must pay the cost of checking the goods required for delivery in accordance with A4 (such as checking the quality, measurement, weight and counting of the goods).

The seller must provide at the expense of the package required by the pport in accordance with his / her arrangement (unless the goods described in the contract are described in accordance with the relevant industry practice, the goods need not be packed and shipped).

Packaging should be properly marked.

B9 cargo inspection

The buyer must pay the cost of any pre shipment inspection, except for the compulsory inspection conducted by the authorities in the exporting country.

A10 other obligations

At the buyer's request and at risk and expense, the seller must give the buyer all the assistance to help the buyer obtain any document or equivalent electronic message required by the country of shipment and / or the country of origin, which may be required for the buyer's import and may pit from other countries, except those listed in A8.

At the buyer's request, the seller must provide the buyer with the necessary information for additional insurance.

B10 other obligations

The buyer must pay all the expenses incurred in obtaining the electronic documents or equivalent electronic documents described in A10, and reimburse the seller for the expenses incurred in assisting him.

At the seller's request, the buyer must provide the necessary information for insurance.