Learning more about Incoterms®2010

Cost Insurance and Freight
or CIF (named port of
destination) Incoterms®2010
is the final of the eleven
Incoterms (it is always
plural) for the class “Rules
for Sea and Inland Waterway
Transport”. According to
the International Chamber
of Commerce (ICC),
in “the second class of
Incoterms®2010 rules, the
point of delivery and the
place to which the goods are
carried to the buyer are both
ports, hence the label ‘sea
and inland waterway’ rules”.
The ICC’s Incoterms
®2010 identifies ten
obligations that the buyer
may need to fulfil in
terms of CIF: (1) general
obligations of the buyer;
(2) licences, authorisations,
security clearances and other
formalities; (3) contracts of
carriage and insurance; (4)
taking delivery; (5) transfer
of risks; (6) allocation of
costs; (7) notices to the
seller; (8) proof of delivery;
(9) inspection of goods;
and (10) assistance with
information and related
costs.
The general obligation of
the buyer is essentially to
pay the price of the goods,
in conformity with the
contract of sale.
In respect of the licences,
authorisations, security
clearances and formalities,
the buyer must obtain at his/
her own risk any import
licence or other official
authorisation and conduct
all customs formalities for
the import of the goods and
for their transport through
any country. The buyer has
no obligation to the seller
to contract for carriage and
insurance.
The buyer must take
delivery of the goods when
they have been delivered in
accordance with the contract
of sale, and received from
the carrier at the named port
of destination.
The buyer bears all risks
of loss of or damage to the
goods from the time that the
goods have been delivered.
However, if the buyer fails
to give notice in accordance
with the “notices to the
seller”, the buyer bears all
risks of loss of, or damage to
the goods.
As for the allocation of
costs, the buyer must pay all
costs from the time that the
goods have been delivered.
This includes unloading
costs, any additional costs,
and where applicable, all
duties, taxes and other
charges, as well as the costs
of any additional insurance,
procured at the buyer’s
request.
The buyer must, should
he/she be entitled to do so,
determine the time for the
shipping of the goods, and/
or the point of receiving the
goods, within the named
port of destination, and give
the seller sufficient notice.
With respect to the
proof of delivery, the buyer
must accept the transport
document. The buyer
must pay for any costs of
mandatory pre-shipment
inspection, except for
mandatory pre-shipment in
country of export.
The buyer must inform the
seller of any security-related
information, and reimburse
the seller for this.
In next week’s issue we
will provide a summary of
Cost Insurance and Freight
(CIF), concluding the
Incoterms ®2010 series.