Cost, Insurance and Freight (CIF)
Cost, Insurance and Freight, or CIF, is a term used in trade referring to the fact that the seller have to arrange the carriage of goods by sea to a port of destination, and provide the buyer with the necessary documents to obtain the products. In other terms, the CIF requires the seller to clear the goods for export.
According to CIF the seller or the exporter is responsible for clearing and delivering the goods to the port of shipment. He is also responsible for paying the costs for the transport of the goods to the appointed port of destination. In addition, the seller has to procure and pay for marine insurance in the buyer's name for the shipment.
For his part, the buyer, assumes responsibility for risk of loss or damage, including any additional transport costs, once the products are cleared at the port of shipment.
Note: Cost and Freight is applicable only to ocean or inland waterway transport.
Incoterm Category
CIF is a "C" Incoterm and according to it the exporter is responsible for contracting and paying for carriage and insurance of the goods, but not responsible for additional costs or risks once they have been shipped. These type of terms refers only to "shipment" contracts.
Seller's Responsibilities
- Provide the goods and the documents required by the contract.
- Obtain all the necessary export licenses and authorizations and fulfill all export formalities and procedures.
- Pay costs of carriage and insurance for 110% of the value of the contract to the named port of destination.
- Carry the goods on the named vessel, at the named port and at the date specified in the contract.
- Assume all goods-related risks until they have passed over the ship's rail at the port of shipment.
- Pay all the export duties, taxes and customs formalities.
- Inform the Buyer that the goods have been delivered.
- Provide the buyer with a transport document, allowing him to receive the goods at the destination.
- Pay for verifying the quality and quantity of the goods, provide appropriate packing and marking.
Buyer's Responsibilities
- Pay for the goods according to the contract.
- Obtain and pay for of all the import licenses and authorizations and fulfil all import formalities.
- Take delivery of the goods at the port of destination, according to the contract.
- Assume all goods-related risks after the goods have passed over the ship's rail at the port of shipment.
- Pay all supplemental costs for the goods including unloading, lighterage and wharfage at the port of destination as well as for duties, taxes, transshipment.
- Specify a time and a port of destination for shipping and inform the seller.
- Accept the seller's transport document if it is in conformity with the contract.
- Pay for the pre-shipment inspection, except inspections required by the country of export.
