“Expenses, Insurance 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, CIP rule must be used…
When the CIF rule is used (just like in the CIP, CPT or CFR 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 undertakes the insurance premium, freight and loading expenses and risks, and brings the goods to the port where they will be loaded. Seller provides and agrees with the ship agency. Notifies the buyer that the goods in the sales agreement were loaded in the specified date and place. Seller, by paying the insurance premium, takes out a sea shipment insurance that has the narrowest coverage and that is suitable for the type of goods loaded. After the goods are loaded on the ship, expenses and risk other than the freight and insurance premium 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. Seller must enter into a transport agreement and insurance agreement, on condition that all the expenses shall be borne by itself, for the carriage of the goods to the designated port. It pays the fee of the freight for the destination point entering into an agreement with the transport agency. Takes out the insurance of the goods it has send and pays the insurance premium. Notifies the buyer about the approximate arrival of the goods in the arrival port. Sends the arranged transport document and other required documents to the buyer. As applicable, it must pay expenses for the required customs clearance transactions of export and all the duties, taxes, and other charges required for export.
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 after the moment of delivery except for the freight and insurance premium. Buyer must pay all kinds of mandatory preloading costs of inspections, excluding the examination expenses stipulated by the export country, prior to the loading.