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Define a CIF contract and what are
it’s advantages and disadvantages
1.Md. Rahat ( Lead Writer)
3. Arifur Khan
Contents of my presentation:
• Definition of CIF contract
• Elements of CIF contract
• Advantages of CIF contract
• Disadvantages of CIF contract
Definition of CIF contract:
• Cost, insurance and freight(CIF) means that
the seller delivers when the goods pass the
ship's rail in the port of shipment.
• CIF contract is a cost, insurance and freight
• Lord Atkinson in Jahnson v Trylor Bros
Advantages of CIF contract:
1. The buyer has the advantage of knowing from the date of
the contract the exact price he must pay to obtain the goods:
the contract price includes freight and insurance.
2. The use of the documents to perform the contract and
represent the goods allows the parties to deal with the
3. Ultimately, the buyer has a right once he gets the documents
of sale and he may still reject the goods on their actual
delivery if they turn out to be not in conformity with the
standards he had prescribed.
4. Any one can buy the goods by exchanging documents even
if the good is not reached in port.
5. The buyer is generally protected against such losses by the
bill of lading, giving a contractual right against the carrier,
Sale of Goods Act 1979
‘Unless otherwise agreed, the goods remain at the
seller's risk until the property in them is transferred
to the buyer, but when the property in them is
transferred to the buyer the goods are at the buyer's
risk whether delivery has been made or not.’
So CIF contract is not governed by Sale of Goods Act
1979 which is the advantages of CIF contract.
Disadvantages of CIF contract:
1. The buyer will have nothing in his hands except documents,
which makes his condition more insecure as, he still has to
deal with the insurer and the carrier and he may not be able
to recover from them.
2. If the goods have merely deteriorated or are damaged it
seems more just to permit on a subsequent appropriation
since the buyer will still have in his hands the goods, which
may still be of some commercial value.
3. If the goods are lost or deteriorate after the goods have been
appropriated to the contract, the seller may still tender the
documents; once goods have been appropriated to the
contract the seller is not entitled to tender any others
In conclusion it can be said that, importers prefer CIF
terms when either they’re new to international trade
or they have relatively little freight volume. These
importers often find CIF easier because the suppliers
are responsible for arranging freight and insurance
details. Under these terms the importer relinquishes
control of choosing freight carriers, routing and other
Johnson v Trylor Bros  AC 144 at 145.
Manbre Saccharine Co v Corn Products Co  1KB 198
Ross T smyth & Co Ltd v T D Bailey, Son & Co  3 All ER 60, HL.
Sale of Goods Act 1979, section20.
Bradgate Robert, ‘Commercial law’, 3rd
edition, Oxford University Press, 2005.
Dionysios Flambouras, ‘Transfer of Risk in the Contract of Sale involving Carriage of Goods: A
Comparative Study in English, Greek Law and the United Nations Convention on Contracts for
the International Sale of Goods’, CHAPTER III, TRADE USAGES RELATED TO CONTRACTS
INVOLVING SEA TRANSIT, <
> accessed 28 October 2010.
Gbenga Oduntan, ‘"C.I.F. Gatwick" and other such nonsense upon stilts: Incoterms and the law,
jargon and practice of international business transactions’ (2010) I.C.C.L.R. 21(6), 214-223