CIF contract means cost, insurance and freight contract. In a CIF contract the costs, insurance, and the cost of freight of the goods must be accomplished by the seller (Johnson v Taylor Bros) (1920) AC 144 at 145.
Generally the goods remain at the seller’s risk until it transferred to the buyer. However there are exceptions to this rule; e.g. CIF, FOB whereby the risk can be transferred before the delivery of the goods to the buyer ( Sterns v Vickers[1923]1 KB 78 ) .
Under a CIF contract a buyer will be able to know the exact price he has to pay for the goods including the freight and insurance. The buyer is released from the burdensome duties of securing shipping space, arranging the carriage contract, and procuring the insurance policy. Moreover, CIF contract allows a buyer to resell the goods before they arrive, because of the use of documental contract; whereby the documents represent the goods. Use of document also facilitates the financial institutions involvement; e.g. the buyer’s bank will not take possession of the goods rather they prefer to take up and hold the documents as security for the advance of the price. Thus the seller is also become assured of getting his payment back through showing the documents even the goods are damaged or never arrived. However the buyer is generally protected against such losses by the bill of lading, giving a contractual right against the carrier, and the insurance policy, which covers most accidental losses.
The risks of market fluctuation have to be considered by the buyer and seller both. So the law should be clear so that the trader can take decisions rapidly. CIF contract needs a much more development in light of present world
The kst part is not so clear. But the writting is nice and one can easily have an idea about CIF contract.
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