Is a Cif Contract a Sale of Documents

Under a CIF contract, the Seller fulfills its obligations by offering the documents to the Buyer. He is not obliged to deliver the goods to the agreed destination, but he is negatively obliged not to prevent the delivery of the goods to the buyer at their destination. This can be done by preventing the carrier from delivering them to the buyer or by sending them to another destination. However, if the contract contains a clause imposing on the seller the obligation to deliver the goods to the agreed destination, it will not be considered a CIF contract, even if the letters “CIF” appear in the contract. Not all contracts expressed as a CIF contract are one. Kind. Article 155 of the Trade in Commerce Act provides: “A contract that contains conditions that make the seller liable for the deterioration of the goods after shipment or that make the performance of the contract conditional on the safe arrival of the ship or that gives the buyer the opportunity to accept the goods in accordance with the contract or in accordance with the pro forma given to him at the time of the conclusion of the contract; does not constitute a CIF or FAB sale, but is considered a sale subject to delivery at the place of arrival. 11. The Buyer must require all the documents required by a CIF contract in an appropriate form and with the necessary information so that he can process them by negotiating the documents before the arrival of the goods or come into possession of the goods immediately after their arrival. In case of loss or damage to the goods during transport, the documents are required so that he can immediately assert his claim against the carrier or insurer.

The seller is therefore required to do what is reasonably reasonable in the given circumstances and must make all reasonable efforts to transmit the documents as soon as possible after shipment. The requirement that documents be submitted with “commercial expeditiousness” expresses a more urgent need for action than the term “reasonable time” suggests. (4) Under the designation C.I.F. or C. & F., unless otherwise agreed, the buyer must make the payment against the offer of the necessary documents and the seller can neither submit an offer nor the buyer demand the delivery of the goods in replacement of the documents. 9. Insurance “on their behalf” is current and sufficient. However, for an offer to be valid, it must be an insurance policy that can be assigned with the bill of lading and must therefore “be sufficiently proven to cover the same goods that fall under the bill of lading”. It must separately cover the quantity of goods required by the buyer`s contract and not insure its goods only in the context of a larger quantity of interest to others, a case provided for in U.S.

commercial practice through the use of negotiable certificates of insurance expressly authorized in this section. Once used, these certificates are treated as the equivalent of separate policies and are good tenders under CIF contracts. However, the term “certificate of insurance” does not in itself include certificates or “certificates of coverage” issued by the insurance broker indicating that the property is covered by a policy. Their sufficiency as a substitute for policies depends on evidence of established use or trade history. This section rejects the English rule that not only broker certificates and “coverage notes,” but also certain forms of U.S. insurance certificates do not comply with policies and do not constitute a good offer under a CIA contract. English case law, which forms the basis of many international shipping contracts, has concluded that it is irrelevant whether the buyer and seller were aware of the loss of the vessel before the latter submitted the documents; the buyer must pay the price. Therefore, the seller may surrender the documents even if he is actually aware of the loss of the ship 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 has already paid the price, he cannot demand his return. In addition, under a CIF contract for the sale of goods, a seller who has shipped the agreed goods under a bill of lading and has received the appropriate documentation may offer those documents to the buyer, even if it is aware of the loss of the goods at the time of such an offer. CIF`s terms and conditions define when the Seller`s liability ends and the Buyer`s liability begins.

The CIF is a traditional method of shipping goods for importers. This is similar to free shipping on board, with the main difference being which party is responsible for the cost until the product is loaded onto the shipping ship. As a general rule, exporters who have direct access to vessels use the CIF. In accordance with the CIF Conditions, the Seller is responsible for certain protective measures for an order. Seller`s responsibilities include: Although documents are an essential part of CIF contracts, this does not represent CIF contracts as money against document contracts and not as money against commodity contracts. 17. It should be recalled that, in a French contract, the concept of `C.A.F. does not mean `cost and freight`, but has exactly the same meaning as the concept of `C.I.F.`, since it is simply the French equivalent of that term. The “A” does not mean “and”, but “insurance”, which means insurance. Under a CIF contract, the buyer is required to pay against the offer of a bill of lading of its own that covers the goods for sale, an insurance policy and a commercial invoice indicating the price.

The buyer is obliged to pay against the offer of the documents, regardless of whether the goods were lost or damaged after shipment at sea. In the event of loss, the Buyer must pay the price when submitting the documents, and any remedies are directed against the carrier in accordance with the bill of lading or against the insurer in accordance with the insurance policy, but not against the Seller in accordance with the purchase contract. If the Buyer refuses to pay for the documents without legitimate reason, he is obliged, in accordance with Article 150 of the Commercial Code, to compensate the Seller for the damage suffered. Fees, Insurance and Freight (CIF) are fees paid by a seller to cover the costs, insurance and freight of a buyer`s order during transport. The goods are exported to a port specified in the purchase contract. Until the goods are fully loaded onto a transport vessel, seller will bear the cost of loss or damage to the Product. If the product requires additional duties, export documents, or inspections or diversions, the seller must bear these costs. Once the cargo is loaded, the buyer bears all other costs. The CIF is similar, but not the same as transport and insurance (CIP).

3. The insurance provided for in the C.I.F. clause benefits the buyer in order to protect him from the risk of loss or damage to the goods during transport. A clause in a CIF contract “insurance – on behalf of the seller” should be considered in their ordinary commercial case, which means that sellers must pay for the insurance and not that it must run for the benefit of the seller. CIF is one of the international trade terms known as Incoterms. Incoterms are common trade rules developed by the International Chamber of Commerce (ICC) in 1936. The ICC established these conditions to govern shipping policies and the responsibilities of buyers and sellers engaged in international trade. Incoterms are often similar to national terms (such as the U.S.

Uniform Commercial Code), but are applicable internationally. For example, parties to a contract must indicate the location of the applicable law for their terms. The ICC restricts the use of the CIF for goods transported to those moving by inland waterways or sea. The exact details of the purchase contract determine when responsibility for the goods passes from the seller to the buyer. In most cases, the seller`s obligation ends as soon as the load is complete. However, a buyer may stipulate that the seller is liable until the goods reach a point of entry or even their final destination. It could be said that under a CIF contract, the seller is required to prepare for the carriage of the goods; and that transport insurance should be included in the contract price. Therefore, the seller receives a bill of lading, an insurance policy and a commercial invoice, and then gives these documents to the buyer, who is required to pay against them. In view of the above, it can be concluded that under a CIF contract, the buyer cannot refuse the documents and demand the actual goods from the seller. The seller also cannot withhold the documents and offer the goods. In addition, the execution of a CIF contract is carried out by the delivery of the documents and not by the actual delivery of the goods by the seller. Therefore, it was argued that a CIF contract was 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 the sale of documents. Otherwise, the second chapter of Book Two, Part Two, of the Commercial Transactions Act, which deals with “certain types of commercial sales,” including CIF contracts, would not regulate such contracts. (6) The requirement that, unless otherwise agreed, the seller must take out insurance `of the type and under the conditions then customary in the port for dispatch in the usual quantity in the contractual currency, sufficiently designated to cover the same goods covered by the bill of lading` applies to both maritime insurance and insurance against war risks ….