“Expenses and Freight” rule expresses the delivery of the goods by the seller on the ship or procure the goods that have already been delivered this way. This rule may not be suitable for the circumstances where the seller delivers the goods in the terminal prior to loading onto the ship to a carrier. For example, it is natural to be delivered this way when the goods are in containers. In such cases, CPT rule must be used., When the CFR rule is used (just like in the CIP, CPT or CIF rules), seller carries out its delivery obligation not when the goods arrive at the place of destination, but when the goods are delivered pursuant to the respective rule to the carrier.
Characteristics of the delivery type: In this type of delivery, seller undertaking all the expenses and risks brings the goods to the port that they will be loaded. Conducts the customs clearance and realizes the loading by paying the freight charge. As of this moment, all the expenses and risk regarding the goods out of the freight pass to the buyer.
Seller’s Obligations: Seller prepares the goods in compliance with the agreement terms and conditions. Prepares the required documents it will be using in the Buyer’s country. Completes the customs clearances. It pays the fee of the freight for the destination point entering into an agreement with the transport agency. Seller must enter into a transport agreement, on condition that all the expenses shall be borne by itself, for the carriage of the goods to the designated port. Seller does not have an obligation to make an insurance agreement. After the goods pass the ship’s rail, all the expenses and risks that occur out of the freight shall be borne by the buyer. Seller notifies the buyer about loading that took place and the possible date of arrival. Sends the arranged transport document and other required documents to the buyer.
Buyer’s Obligations: Pays the value of the goods in compliance with the agreement terms and conditions. Completes the customs clearances by arranging the customs documents for import. Pays the customs taxes. Unloads its goods without delays by way of paying the unloading expenses and port fees at the port of arrival. It must pay all the expenses that have been spent for the goods during the transport except for the freight. As applicable, it must pay all the duties, taxes, and other charges required for import of the goods as well as the expenses of customs clearances and the expenses of the transit of the goods in any country on condition that they are not within the scope of the transport agreement. Buyer must pay all kinds of mandatory preloading costs of inspections, excluding the examination expenses stipulated by the export country, prior to the loading.