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The term "C" - INCOTERMS 2000

CFR|CIF|CIP|CPT

"C"- the terms oblige the seller to conclude a contract of carriage under normal conditions at his own expense. Therefore, the point up to which he must pay the transport costs must necessarily be indicated after the corresponding "C" - term.
According to the termsCIFAndCIPThe seller must insure the goods and bear the costs of insurance. Since the cost-sharing point is fixed in the country of destination, "C"-terms are often erroneously considered to be arrival contracts in which the seller bears all risks and costs until the goods have actually arrived at the agreed point.
It should be emphasized that the "C" terms are of the same nature as the "F" terms in that the seller performs the contract in the country of shipment or dispatch. Thus, sales contracts under the "C" terms, like contracts under the "F" terms, fall into the category of shipment contracts.
It is in the nature of shipping contracts that, while the normal transport costs for the carriage of the goods on the usual route and in the usual way to the agreed place must be paid by the seller, the buyer bears the risks of loss or damage to the goods, as well as additional costs arising from events occurring after the goods have been properly delivered for carriage.

Thus, "C" terms differ from all other terms in that they contain two "critical" points.
One indicates the point to which the seller must arrange transport and bear the costs under the contract of carriage, and the other serves to transfer risks. For this reason, maximum care must be taken when adding to the seller the obligations that are incumbent on him after the risk passes beyond the above "critical" point.
The essence of the "C"-terms is to release the seller from any further risks and costs after he has duly fulfilled the contract of sale by concluding a contract of carriage, handing over the goods to the carrier and securing insurance in accordance with the termsCIFAndCIP.
The nature of the "C"-terms as shipment contracts can also be illustrated by the widespread use of documentary credits as the preferred mode of payment used in such circumstances. In cases where the parties to the contract of sale have agreed that the seller will receive payment upon presentation to the bank of the agreed shipping documents for a documentary credit, it would be completely contrary to the main purpose of a documentary credit if the seller bears further risks and costs after receipt of payment for documentary credits or after shipment and dispatch of the goods.
Of course, the seller will have to bear all costs under the contract of carriage, whether the goods are prepaid, post-shipment, or payable at the destination (the freight is payable by the consignee at the port of destination); however, additional costs that may arise as a result of events occurring after shipment and dispatch must be borne by the buyer.
If there are usually several contracts of carriage involving the transhipment of goods at intermediate points to reach the agreed destination, the seller must pay all these costs, including any costs incurred when the goods are transshipped from one means of transport to another. However, if the carrier used its rights - under the contract of carriage - to avoid unforeseen obstacles (for example, ice, strikes, labor violations, government regulations, war or hostilities), then all additional costs arising from this will be charged to the buyer, since the seller's obligation is limited to securing an ordinary contract of carriage.

It often happens that the parties to a contract of sale wish to be clear to what extent the seller must secure the contract of carriage, including the costs of unloading. Since such costs are usually covered by freight when the goods are transported by ordinary shipping lines, the contract of sale often provides that the goods be transported in this way, or at least in accordance with the "conditions for the carriage of goods by regular ships".
In other cases, after the termsCFRAndCIFthe words "including unloading" are added. However, it is not recommended to add an abbreviation after "C"-terms, unless the meaning of the abbreviation is clearly understood and accepted by the contracting parties in the relevant area of trade, or under the relevant law or custom of trade.
In particular, the seller should not - and could not - without changing the very nature of the "C" terms, undertake any obligation regarding the arrival of the goods at the destination, since the risk of delay during transport is borne by the buyer. Thus, any obligation regarding time must necessarily refer to the place of shipment or dispatch, for example "shipment (dispatch) no later than ...". The contract, for example,CFRVladivostok no later than..." is in fact incorrect and thus open to all sorts of interpretations.
It can be assumed that the parties meant either that the goods should arrive in Vladivostok on a certain day, in which case the contract is not a shipment contract, but an arrival contract, or, in another case, that the seller must send the goods at such a time that the goods arrived in Vladivostok before a certain date, except in cases of delay in transportation due to unforeseen events.

In the trade of goods, it happens that a commodity is purchased while it is at sea, and in such cases the word "afloat" is added after the term of trade. Since in these cases, in accordance with the termsCFRAndCIFthe risk of loss or damage to the goods has already passed from the seller to the buyer, it may be difficult to interpret.
One possibility is to keep the usual meaning of the termsCFRAndCIFregarding the distribution of risk between the seller and the buyer, namely that the risk passes after shipment: this would mean that the buyer could be forced to assume the consequences of events that had already taken place at the time the sales contract entered into force.
Another possibility to clarify the moment of transfer of risk is the time of conclusion of a new contract of sale. The first possibility is more realistic, since it is usually impossible to determine the condition of the goods during transport. For this reason, Article 68 of the 1980 UN Convention on Contracts for the International Sale of Goods (CISG) provides that "if circumstances so indicate, the risk shall be assumed by the buyer from the moment the goods are handed over to the carrier who issued the documents included in the contract of carriage".
However, this rule has an exception when "the seller knew or should have known that the goods were lost or damaged and did not inform the buyer". Thus, the interpretation of the termsCFRAndCIFwith the addition of the word "afloat" will depend on the law applicable to this contract of sale.

The parties are advised to ascertain the applicable law and any decision that may then follow. In case of doubt, the parties are advised to clarify this issue clearly in their contract.
In practice, the parties often continue to use the traditional expression C&F (or C and F, C+F). However, in most cases it turns out that they treat these expressions as equivalentCFR. To avoid difficulties of interpretation, the parties should use the correct term, namely the termCFR, which is the only globally accepted standard abbreviation for the term "Cost and freight(... name of destination port)".
TermsCFRAndCIFin articles A.8. collectionIncoterms1990 required the seller to provide a copy of the charter party in all cases where his transport document (usually a bill of lading) contained a reference to the charter party, for example, by stating "all other conditions as for the charter party". While, of course, the contracting party should always be in a position to specify all the terms of its contract - preferably at the time of the conclusion of the contract of sale - it appears that the practice of granting a charter party in the manner described above creates problems in connection with documentary credit operations.
The obligation of the seller to provide in accordance with the termsCFRAndCIFa copy of the charter party, along with other transport documents, was omitted inIncoterms2000.
Although articles A.8. collectionIncotermstend to ensure that the seller provides the buyer with "proof of delivery", it should be emphasized that the seller fulfills this requirement by providing "usual" proof. According to the termsCPTAndCIPthis would be the "ordinary transport document" and according to the termsCFRAndCIFit will be a bill of lading or a sea waybill. Transport documents must be "clean", which means that they must not contain clauses or indications that the goods or packaging are in poor condition. If such clauses or indications appear in a document, it is considered "impure" and is not accepted by banks in documentary credit transactions.

However, it should be noted that a transport document, even if it does not contain such clauses or indications, usually does not provide the buyer with irrefutable evidence against the carrier that the goods were shipped in accordance with the terms of the contract of sale.
Typically, the carrier, in standard text on the first page of the transport document, declines to accept responsibility for the information regarding the goods, indicating that the details included in the transport document are only the shipper's statements.

Under most applicable laws and policies, the carrier must at least use reasonable means of verifying the accuracy of the information, and his failure to do so may make him liable to the consignee. However, in the container trade, the carrier has no way of checking the content of the container, unless he himself was responsible for loading the container.
There are only two terms related to insurance, namely the termsCIFAndCIP. In accordance with these terms, the seller is obliged to provide insurance in favor of the buyer. In some cases, the parties themselves decide whether they wish to insure themselves and to what extent. Since the seller takes out insurance in favor of the buyer, he does not know the exact requirements of the buyer.

In accordance with the terms of cargo insurance of the association of London insurers, insurance is provided with "minimum coverage" under Clause "C", with "medium coverage" under Clause "B" and with "most extensive coverage" under Clause "A".
Since in the sale of goods by termCIFthe 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 not possible to know the amount of insurance appropriate for such subsequent buyers, and thus a minimum insurance ofCIF, which, if necessary, allows the buyer to require additional insurance from the seller.

The minimum insurance, however, is not suitable for the sale of manufactured goods, where the risk of theft, theft or improper handling or storage of goods requires more than Claim "C" insurance. Since the termCIPas opposed to the termCIFnormally used for the sale of manufactured goods, it would be more appropriate to approve the most extensive insurance coverage forCIPthan the minimum insuranceCIF.
But changing the insurance obligation by the seller under the termsCIFAndCIPwould lead to confusion, and thus both terms would reduce the seller's obligation to insure to a minimum insurance. Buyer by termCIPit is especially important to know the following: if additional insurance is required, he must agree with the seller that the latter will provide additional insurance or take on extended insurance.

There are also certain instances where the buyer may wish to obtain more protection than is provided under Condition "A" of the above Association, such as insurance against war, riot, civil unrest, strikes, or other work disruption. If he wishes the seller to provide such insurance, he must provide him with appropriate instructions, in which case the seller must, if possible, provide such insurance.