Incolearn – Learning more about Incoterms 2000

CARRIAGE AND INSURANCE PAID TO (CIP)
PART II
– The Seller's Obligations The International Chamber of Commerce (ICC) defines the eighth Incoterm, Carriage and Insurance Paid to (CIP), at a named place of destination, as “the seller delivers the goods to the carrier nominated by him, but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer bears all risks and any additional costs occurring after the goods have been delivered. However, in CIP, the seller also has to procure insurance against the buyer’s
risk of loss or damage to the goods during the carriage ”. Professor Jan Ramsberg, the chairman of the ICC Working Party on Trade Terms, identified ten obligations that the seller might need to fulfil in terms of Carriage and Insurance Paid To:
(1) the provision of goods in conformity with the contract; (2) licences, authorisations and formalities; (3) contracts of carriage and insurance; (4) delivery; (5) transfer of risks; (6) division of costs; (7) notice to the buyer; (8) proof of delivery, transport documents or equivalent electronic message; (9) checking, packaging, marking; and (10) other obligations. The provision of goods in conformity with the contract implies that the documents stipulated in the contract of sale must be provided. In respect of the licences, authorisations and formalities, the seller must obtain any export licence or other official authorisation, and where applicable, carry out customs formalities necessary for the export of the goods. The seller must contract the carriage of the goods to the agreed point at the named place of destination. If such a point is not agreed the seller may select it. In respect of the contracts of carriage and insurance, the seller has to contract for carriage and obtain insurance as agreed in the contract of carriage. The delivery of the goods by the seller must be to the contracted carrier. As for the transfer of risks, the seller bears all risks of loss of or damage to the goods until such time as they have been delivered. In relation to the division of costs, the seller must pay all the costs relating to the goods until their delivery, and if applicable also pay all costs in respect of customs formalities necessary for export. The seller must give sufficient notice to the buyer regarding delivery of the goods. Regarding proof of delivery, transport documents or equivalent electronic message, the seller must, at his expense, provide the buyer with the usual transport documents. Depending on the stipulations in the contract of sale the checking, packaging, marking costs are for the seller’s account, including providing the packaging of the goods. As for other obligations, the seller must assist the buyer with information in respect of the import of the goods and for their transit through any country, and where necessary for procuring insurance. Our next column will focus on the buyer’s obligations under Carriage and Insurance Paid To (CIP). INCOLEARN is prepared by Riaan de Lange of South African Tariff & Trade Solutions CC (SATTS), a lecturer in Economics at the University of Pretoria.