CIF Contracts Essay Example | Topics and Well Written Essays - 1250 words

CIF Contracts - Essay Example This law essay outlines peculiar features of CIF contracts. Cost, insurance and freight (CIF) denotes that the vendor delivers when the products pass the ship's bar in the port of consignment. A CIF contract needs the seller to ship at the port of consignment the required products in the underlying agreement of sale, to acquire a agreement of carriage (bill of lading) under which the products will be delivered to the established destination, to organize for insurance that will be obtainable for the advantage of the buyer, to formulate a commercial invoice and lastly to tender these papers to the purchaser who must be prepared and willing to pay the cost of the consigned products. In such a scenario, the ownership of the products may pass either on consignment or on delivery of the documents. The risk normally passes on consignments or as from shipments, but ownership does not pass pending the documents which symbolizes the products are provided in exchange for the cost. As an outcome , the purchaser, after acceptance of the documents, can claim against the transporter for infringement of the agreement of carriage and against the underwriter for any loss enclosed by the policy. In accordance to a CIF contract, the buyer is required to pay against the tender of a genuine bill of lading that guarantees the products contracted to be sold, an insurance document and a saleable invoice that indicates the price.4 The buyer is obliged to make payment against the tender of the respective papers of contract notwithstanding of fact that the products have been damaged or lost at maritime after the shipment.5 In the incident of loss, such as case of study, the buyer (N&Y Ltd) must pay the value on provision of the documents and necessary remedies, if any, will be against the transporter as indicated in the bill of lading or aligned to the underwriter as per the insurance agreement, but not against the seller (A&W Ltd) under the agreement of sale. If the purchaser declines to pay (as indicated in this case) against the papers without any legal justification, the buyer shall be legally responsible to compensate the seller for damage that may outcome, as enacted in Article 150 within the Commercial Transactions Law (Meiselles 2013). Under a CIF agreement, the seller performs the requirements by providing the documents to the buyer. The seller is not required to deliver the products to the agreed destination but the seller is under a negative responsibility not to avert the goods from being delivered to the buyer at their premises. This might be executed by deterring the carrier from delivering products to the buyer or by transferring them to a diverse destination (Meiselles 2013). However, if the agreement contains a section that imposes on the seller an obligation to transport the products to the contracted destination, it is not regarded as a CIF agreement, even if the documents of ‘CIF’ emerge in the contract.   Not all agreements that ar e expressed to be CIF agreements are such. According to Article 155 of the Commercial Transactions Law,6 it is stated that ’a contract which encloses such status as will make the seller accountable for