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The video looks at the correct point of delivery in CIF Incoterm and who bears the risk of loss and damage to the goods in transit
When a seller and a buyer enters into a sales contract, they would need to specify a lot of details eg method of payment, what are the goods (quantity and quality), delivery dates, documents required etc.
They would also indicate what is the Incoterm Rules to be used. There are 11 Incoterm rules in the current Incoterms 2010 published by the International Chamber of Commerce. They are: EXW, FOB, FAS, FCA, CFR, CIF, CPT, CIP, DAT,DAP,DDP.
The Incoterm rules describe mainly the tasks, costs and risks involved in the delivery of goods from the sellers to buyers.
When the sales contract is signed, the seller has the obligation to deliver the goods to the buyer. The buyer must take delivery of the goods and receive them from the carrier at the named port of destination. It is important to note that at what point can we say that the seller has delivered the goods to the buyer.
Under CIF which belongs to Incoterms Group C – Main Carriage Paid, the seller nominates the vessel and pays the cost and freight to bring the goods right to Port of Destination. The seller also arrange for insurance cover.
In this video we look at two key questions which is
- At what point can we say that the Seller has delivered the goods to the Buyer
- If the goods are damaged along the way, who bears the risk of loss or damage to the goods?
Under Guidance Note of Incoterms 2010 Rules published by ICC, you will find that ICC define delivery of CIF as follows:
Definition of CIF
Cost, Insurance and Freight means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risks of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.