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Information International rules and organization Incoterms 2000 [iNKOTERMS 2000] The term C

The term "C" - Incoterms 2000

CFR | CIF | CIP | CPT

"C" - -terms Require the seller to contract for carriage on usual terms at his own expense. Therefore, a point up to which he would have to pay transport costs must necessarily be indicated after the respective "C" - terms.
In accordance with the terms CIF и CIP the seller must insure the goods and bear the costs of insurance. Since the point of separation of costs is fixed in the country of destination, "C" - terms are frequently mistakenly believed to be arrival contracts, in which the seller would bear all risks and costs until the goods have actually arrived at the agreed point.
It should be stressed that the "C" - terms are of the same nature as the "F" - terms in that the seller fulfills the contract in the country of shipment or dispatch. Thus, the contracts - the sale in accordance with the "C" - terms, like the contracts under "F" - terms, fall within the category of shipment contracts.
The nature of contracts shipment laid down that, while the normal transport cost for the carriage of goods by a usual route and in a conventional manner to the agreed place shall be paid by the seller, the buyer bears the risk of loss or damage to the goods, as well as additional expenses incurred as a result of events occurring after the goods have been appropriately delivered for carriage.

Thus, "C" - the terms are different from all other terms in that they contain two "critical" point.
One indicating the point to which the seller is bound to arrange and bear the costs under the contract of carriage and another one for the risks. For this reason, the greatest caution must be observed when adding obligations of the seller that are assigned to him after the transfer of risk beyond the aforementioned "critical" point.
The essence of "C" - terms is to release the seller from any further risks and costs after he has duly complied with the contract of purchase - sale contract for carriage, passing the goods to the carrier and providing insurance in accordance with the terms CIF и CIP.
The essence of the "C" terms as both shipment agreements can also be illustrated by the widespread use of documentary credits as the preferred method of payment used in such conditions. In cases where the parties to the contract of sale have agreed that the seller will receive payment when submitting agreed shipment documents for the documentary loan to the bank, the main purpose of the documentary loan would be completely inconsistent if the seller carried further risks and expenses after receiving payment for documentary credits or After shipment and dispatch of goods.
Of course, the seller would have to bear all the costs of the contract of carriage irrespective of whether freight is pre-paid upon shipment or is to be paid at destination (freight payable to the consignee at the destination port); however, additional costs which may result from events occurring subsequent to shipment and dispatch are necessarily for the account of the buyer.
If there are usually several transport contracts involving transhipment of goods at intermediate points to reach an agreed destination, the seller must pay all of these costs, including any costs incurred when transferring goods from one vehicle to another. However, if the carrier used his rights - according to the contract of carriage - to avoid unforeseen obstacles (for example, ice, strikes, labor violations, government orders, war or military actions), then all the additional costs resulting from this will be charged to the buyer, Since the seller's obligation is limited to the provision of a conventional contract of carriage.

It often happens that the parties to the contract - sale wish to clarify the extent to which the seller should procure a contract of carriage including the costs of discharge. Since such costs are normally covered by the freight when the goods are carried by regular shipping lines, the contract of purchase - sale will frequently stipulate that the goods are to be so carried or at least according to the "conditions of carriage of goods by trip by the courts."
In other cases following terms CFR и CIF added the word "landed". However, it is not recommended to add the abbreviation after "C" - terms, if in the relevant trade value abbreviations is clearly understood and accepted by the contracting parties or under any applicable law or custom of the trade.
In particular, the seller should not - and he could not - without changing the very nature of the "C" - terms undertake any obligation with respect to the goods arriving at their destination, since the risk of any delay during the carriage is borne by the buyer. Thus, any obligation with respect to time must necessarily refer to the place of shipment or dispatch, for example, "shipment (dispatch) not later than ...". The contract, for example, "CFR Vladivostok no later than ... "is really a misnomer and thus open to different possible interpretations.
It can be assumed that the parties had in mind, or that the goods have arrived in Vladivostok on a certain day, in which case the contract is not a shipment contract but an arrival contract or, alternatively, that the seller must ship the goods at such a time to goods arrived in Vladivostok before a certain date, except transportation delays due to unforeseen events.

It happens in commodity trades that goods are bought while they are at sea, and in such cases when the terms of trade are added the word "afloat". Since in these cases, in accordance with the terms CFR и CIF the risk of loss or damage to the goods has passed from the seller to the buyer, difficulties of interpretation might arise.
One possibility is to maintain the ordinary meaning of the terms CFR и CIF regarding the allocation of risk between seller and buyer, namely that risk passes upon shipment: this would mean that the buyer might have to assume the consequences of events that have already occurred at the time when the contract of purchase - sale came into force.
Another possibility to clarify the risk of transition time is the time of the conclusion of a new contract of purchase - sale. The first possibility is more real, since it is usually impossible to determine the goods during transport. For this reason, Article 68 1980, the UN Convention on Contracts for the International Sale of Goods (CISG) provides that "if the circumstances indicate, the risk is assumed by the buyer from the date of transfer of goods to the carrier who issued the documents embodying the contract of carriage".
However, this rule has an exception when "the seller knew or should have known that the goods had been lost or damaged and did not disclose this to the buyer". Thus, the interpretation of terms CFR и CIF with the addition of the word "afloat" will depend upon the law applicable to the contract - the sale.

The parties are advised to ascertain the applicable law and any solution which might follow. In case of doubt, the parties are advised to clarify the matter in their contract.
In practice, the parties frequently continue to use the traditional expression C & F (or C and F, C + F). However, in most cases it is that they are considered as equivalent to the expression CFR. To avoid difficulties of interpreting their contract the parties should use the correct term, namely the term CFRWhich is the only worldwide accepted standard abbreviation for the term "Cost and freight (... Named port of destination). "
terms CFR и CIF articles A.8. collection Incoterms 1990 obliged the seller to provide a copy of the charterparty whenever his transport document (usually the bill of lading) contained a reference to the charterparty, for example, by the frequent notation "all other terms and conditions as the charter party." Although, of course, a contracting party should always be able to ascertain all terms of his contract - preferably at the time of conclusion of the contract - the sale - it turns out that the practice of a charter party, in accordance with the above causes problems in connection with documentary credit transactions.
The obligation of the seller under the terms CFR и CIF a copy of the charterparty together with other transport documents has been deleted in Incoterms 2000.
Although Article A.8. collection Incoterms tend to ensure that the seller provides the buyer with «proof of delivery", it should be stressed that the seller fulfills that requirement when he provides the "usual" proof. In accordance with the terms CPT и CIP it will be "usual transport document" and under the terms CFR и CIF a bill of lading or a sea waybill. The transport documents must be "clean", which means that they must not contain clauses or notations expressly declaring a defective condition of the product or packaging. If such clauses or notations appear in the document, it is considered "unclean" and would not be accepted by banks in documentary credit transactions.

However, it should be noted that a transport document even without such clauses or notations would usually not provide the buyer with incontrovertible proof as against the carrier that the goods were shipped in accordance with the terms of the contract of purchase - sale.
Typically, the carrier in the standard text on the front page of the transport document refuses to accept responsibility for the information on the product, indicating that the details included in the transport document represent only the statement of the shipper.

Under most applicable laws and principles, the carrier must at least use reasonable means of checking the accuracy of the information and his failure to do so may make him liable to the consignee. However, in container trade, the carrier's means of checking the contents of the container, unless he himself was responsible for stowing the container.
There are only two terms which deal with insurance, namely terms CIF и CIP. Under these terms the seller is obliged to procure insurance for the benefit of the buyer. In some cases, the parties themselves to decide whether they wish to insure themselves and to what extent. Since the seller takes out insurance for the benefit of the buyer, he does not know the buyer's precise requirements.

In accordance with the terms of cargo insurance association of London Underwriters, insurance is available in "minimum cover" under Clause "the C", "medium cover" under Clause "B" and "the most extensive cover" under "A" conditions.
Since commercially available products by the term CIF the buyer may wish to sell the goods in transit to a subsequent buyer who in turn may wish to resell the goods again, it is impossible to know the insurance of a size suitable to such subsequent buyers and, therefore, has traditionally selected the minimum insurance CIFThat, if necessary, allows the buyer to require the seller to additional insurance.

Minimum cover is however unsuitable for sale of manufactured goods where the risk of theft, pilferage or improper handling or storage of goods requires more than a "C" on the insurance conditions. Because the term CIP Unlike term CIF normally used for the sale of industrial goods, it would be better to adopt the broadest insurance coverage for CIPThan the minimum insurance CIF.
But to vary the seller's insurance obligation under the terms of CIF и CIP will lead to confusion, and thus, both conditions reduce the seller's insurance obligation to the minimum cover. Buyer for the term CIP especially important to know the following: the need for additional security, he should agree with the seller that the last additional insurance or take on itself the extended insurance.

There are also particular instances where the buyer may wish to obtain even more protection than is available under Institute Clause "A" Association named above, for example, insurance against war, riots, civil commotion, strikes or other labor disturbances. If he wishes the seller to arrange such insurance he must instruct him accordingly, and in this case, the seller would have to provide such insurance.