CARRIAGE AND INSURANCE PAID TO (CIP) PART III – The Buyer’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 buyer might need to fulfil in terms of Carriage and Insurance Paid To: (1) the payment of the price; (2) licences, authorisations, and formalities; (3) contracts of carriage and insurance; (4) taking delivery; (5) transfer of risks; (6) division of costs; (7) notice to the seller; (8) proof of delivery, transport documents or equivalent electronic message; (9) inspection of the goods; and (10) other obligations. The payment of the price requires the buyer to pay the price stipulated in the contract of sale. In respect of the licences, authorisations and formalities, the buyer is required, at his own risk and cost, to obtain such documentation and authorisation for the importation of the goods and for their transit through any country. The buyer has no obligation in respect of contracts of carriage and insurance. The buyer must take delivery of the goods when they have been delivered in accordance with the contract of sale, and receive them from the carrier at the named place. As for the transfer of risks the buyer bears all risks of loss of or damage to goods from the time of delivery. In relation to the division of costs, the buyer is responsible for all costs, from the time they are delivered, as well as all costs and charges relating to the goods while in transit until their arrival at the agreed place of destination. In addition, he is also responsible for the unloading costs, all additional costs incurred if he fails to give notice to the seller, and where applicable all duties, taxes and other charges as well as the costs of carrying out customs formalities. The buyer must give sufficient notice to the seller of the time for the dispatching of the goods and/or their destination. The buyer must accept the proof of delivery, transport documents or equivalent electronic message. The buyer must pay the costs for the inspection of the goods i.e. pre-shipment inspection, except when the authorities of the country of export mandate such inspection. As for other obligations, the buyer must pay all costs and charges incurred to obtain the relevant documentation and also reimburse the seller for any costs incurred in rendering such assistance. The buyer must, at the seller’s request, provide the necessary information for procuring additional insurance. Next week’s column will provide a summary of the Carriage and Insurance Paid To (CPT) term. INCOLEARN is prepared by Riaan de Lange of South African Tariff & Trade Solutions CC (SATTS), a lecturer in Economics at the University of Pretoria.
