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CIF CONTRACT ANALYZED

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CIF CONTRACT ANALYZED

  1. 1. •D E F I N I T I O N O F C I F C O N T R A C T •R E L A T I O N B E T W E E N S E L L E R A N D B U Y E R INTRODUCTION
  2. 2. SELLER OBLIGATION  To ship goods or to buy conforming goods afloat;  To procure a contract of carriage by sea and to obtain the bill of lading;  To arrange insurance;  To tender these documents.
  3. 3. BUYER OBLIGATION  To accept the documents and pay contract price(if they are proper with the contract terms);  To receive the goods at the agreed port of destination and bear all costs and;  To bear all risks of the goods from the time of shipment;  To pay the costs and charges in obtaining certificate of origin and consular documents;  To pay Custom duties and taxes and any other duties including license permit payable consequent upon the importation.
  4. 4. BUYER ADVANTAGES  will be able to know the exact price he has to pay for the goods including the freight and insurance;  is released from the burdensome duties and cost of securing shipping space, arranging the carriage contract, and procuring the insurance policy;  can resell the goods before they arrive, because of the use of documental contract, whereby the documents represent the goods;
  5. 5. SELLER ADVANTAGES  is assured of getting his payment back through showing the documents even the goods are damaged or never arrived;  can charge a higher price for the extra price for the extra service e.g. obtaining shipping space, insurance;  get paid as the documents tendered to the buyer or to the buyers bank, he get paid before the goods arrival to its destination;
  6. 6. DISADVANTAGES  The buyer can recover the accidental loss through his insurance but that will be time consuming.  The separation of risk and the passing of property may causes problems to buyer, as he may not be able to bring an action in tort for damage done to the goods prior to his obtaining property or a right of possession in those goods.  According to Scrutton J CIF contract is nothing more than a sale of document , it is not a contract that goods shall arrive, but a contract to ship goods in accordance with contract.
  7. 7. CONCLUSION  importers are free from managing shipping space  seller’s payment is secure and he can claim extra charge also

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