CIF Contract

Running head: INTERNATIONAL COMMERCIAL LAW
CIF Contract
Name of the Student
Name of the University
Author Note

1INTERNATIONAL COMMERCIAL LAW
The subject matter of the case is based on CIF contract. In general, contract is an
agreement that binds the parties under certain legal obligations. CIF contract provides certain
rights and duties specified for the seller and purchaser in a contract. The term CIF means cost,
insurance and freight. These types of contract are usually made during the transportation of
goods through ship. In case of such contract, the seller has to bear every kind of responsibilities
unless the proposed goods are not delivered at the contracted place. Therefore, if any damage has
been made during the delivery time, the seller should be responsible for the same. It has been
observed in the case of Ross T Smyth v TD Bailey, CIF contract is mainly deals with shipment
contract and such contract includes a large quantity of goods for transaction. According to the
sub-language of International Trade Law, the purpose of CIF contract is to supply the goods in
accordance with the terms of the contract that has been signed in between the parties1. Through
this contract, two things can be obtained such as contract for carriage and contract of insurance.
In this contract, certain rights and duties of the buyer and the seller has been encountered.
According to English common law, CIF contract includes cost, insurance and freight. Lord
Wright has added that seller has to perform all the special requirements regarding the contracted
goods. He has to collect the goods, serve a notice of appropriation, and obtain all the necessary
bills and policies of insurance regarding the goods. The word freight that has been included
under the abbreviated word CIF denotes the money paid by the person for the transportation of
goods. These types of words are generally used in the contract that has been made through
shipment. John Bouvier has defined the term as an agreed sum that should be paid entirely or
partly to the parties during the transportation of goods from one part to another.
1 Soyer, Baris, and Andrew Tettenborn. "What is a reasonable contract of carriage for CIF/CIP purposes?–section 32
(2) of the Sale of Goods Act 1979." International Trade and Carriage of Goods. Informa Law from Routledge,
2016. 43-54.

2INTERNATIONAL COMMERCIAL LAW
It has been observed in this case that a contract has been signed in between Kane and
Erickson regarding the delivery of dog foods and it has been contracted that Kane will deliver
1000 kilogram food to Erickson in the stipulated time period. According to the rules of CIF
contract, seller is responsible to deliver the contracted goods, obtain all the necessary documents
and bills for the buyer. It has been stated by Professor M G Bridge that under CIF contract, the
buyer will get all the profits in regards to the contracted objects. However, there is a conflict to
state the nature of the contract. According to some jurists, CIF contract is a sale of documents,
while some are of the view that CIF contract is sale of goods. It has been observed in Couturier v
Hastie2, CIF contract is sale of goods by the means of documents. The specialty regarding the
CIF contract is that the sellers are not obliged to deliver the goods to the buyer; rather they are
obliged to transfer the goods and all the related documents to the buyer so that the buyer can get
right against the insurer. However, the duties of the seller will be extended if additional duties
are mentioned in the contract. The term additional duties denote the liability of the seller
regarding the quality and fitness of the delivered goods and time of delivery details. After the
seller has transferred the goods and submitted all the documents to the buyer, he will serve a
notice of appropriation to the buyer, which will be returned to the seller on subsequent occasions.
It has been mentioned in Kwei Tek Chao v British Traders & Shippers Ltd 3that if any goods
arte rejected by the buyer, they should have no lien over them for the return of the price.
The House of Lords had observed the following in the case of E Qemens Horst Ltd v Biddell
Brothers4:
2 (1856) HLC 673
3 (1954) 2 QB 459
4 (1911) 1 KB 934