50 |	STANDARD TRADE TERMS

Conclusion

It is apparent from the discussion of CIF and FOB that the contract of carriage in the form of a bill of lading plays an extremely important role in international trade. Part III on the transportation of goods examines the rights and liabilities associated with bills of lading, along with the three international conventions – the Hague-Visby Rules, the Hamburg Rules and the recently adopted Rotterdam Rules – which set out the responsibilities and liabilities of the parties to a bill of lading. Before proceeding to transport documentation, the next chapter will examine the Convention on the International Sale of Goods 1980 drafted by UNCITRAL to see how it addresses the obligations of the seller and the buyer and remedies available to the parties to the sale contract in the case of breach by either of the parties.

Further reading

Bennett, ‘FOB contracts: substitution of vessels’ [1990] LMCLQ 466. Bridge, Sale of Goods, [2009] OUP.

Crawford, ‘Analysis and operation of a CIF contract’ [1955] Tulane LR 396.

Eckersley, ‘International sale of goods – licences and export prohibitions’ [1975] LMCLQ 265. Elliott, ‘The changing face of documentation in the carriage of goods’, in Sharpe and Spicer (eds),

New Directions in Maritime Law, [1984] Carswell. Evans, ‘FOB and CIF contracts’ [1993] ALJ 844.

Feltham, ‘The appropriation in a CIF contract of goods lost or damaged at sea’ [1975] JBL 273. Gillies and Moens (eds), International Trade and Business Law, Policy and Ethics, 2nd edn, [2005]

Cavendish Publishing.

Gower, ‘FOB contracts’ [1956] 19 MLR 417.

Hermann, International Trade Terms: Standard Terms for Contracts for International Sale of Goods, [1993] Graham and Trotman/M Nijhoff.

Horn, Adaptation and Renegotiation of Contracts in International Trade and Finance, [1985] Kluwer. Lorenzon, and Sassoon’s, CIF and FOB Contracts, [2012] Sweet & Maxwell.

Murray et al., Schmithoff’s Export Trade, 2007, Stevens.

Murray, ‘Risk at loss of goods in transit: a comparison of the 1990 Incoterms with terms from other voices’ [1991] 23 University of Miami Inter-American LR 93.

Odeke, ‘The nature of CIF contract – is it a sale of documents or a sale of goods?’ [1993] Journal of Contract Law 158.

Ramberg, ICC Guide to Incoterms 2010, [2010] ICC.

Reynolds, ‘Stowing, trimming and their effects on delivery, risk, property in sales “FOBS”, “FOBT” and “FOBST” ’ [1994] LMCLQ 119.

Sassoon, ‘Application of FOB and CIF sales in common law countries’ [1981] ETL 50. Schmithoff, International Trade Usages, [1987] Institute of International Business Law. Treitel, ‘Damages for breach of a CIF contract’ [1988] LMCLQ 457.

Treitel, ‘Rights of rejection under CIF sales’ [1984] LMCLQ 565. Treitel, ‘Time of shipment in fob contracts’ [1991] LMCLQ 147.

Table 1.1a: Seller’s responsibilities in respect of contract of carriage, insurance, export/import licences/security related information under INCOTERMS 2010

SPECIFIC TERMS	MODE OF	SELLER’S	SELLER’S	SELLER’S RESPONSIBILITY	SELLER’S
	TRANSPORT	RESPONSIBILITY	RESPONSIBILITY IN	IN RESPECT OF EXPORT	RESPONSIBILITY
		IN RESPECT OF	RESPECT OF CARGO	LICENCE/SECURITY	IN RESPECT OF
		CONTRACT OF	INSURANCE	INFORMATION	IMPORT LICENCE
		CARRIAGE
Ex works (e.g.,	Rail, road, air,	None	None	None (However, render	None. Seller to
seller’s warehouse,	sea, inland			assistance with obtaining	render assistance
factory)	waterway,			export licence, at buyer’s	in obtaining
	multimodal*			request, expense and risk	information includ-
				buyer’s).	ing security related
				Seller to render assistance	information for the
				in obtaining information	import of the goods
				including security related	at buyer’s risk and
				information for the export	expense.
				of the goods at buyer’s risk
				and expense.
FCA (free carrier)	Rail, road, air,	None. (However,	None. (However,	Obtain at own risk and	None in relation
(delivery to carrier,	sea, inland	if commercial	seller to provide	expense export licence	to import licence.
or another person	waterway,	practice or at	information buyer	and carry out all customs	Seller to render
nominated by	multimodal*	buyer’s request,	at buyer’s risk and	formalities for export.	assistance in
the buyer at the		seller may	expense information		obtaining documents
seller’s premises		contract for	required for buyer to		and information
or another named		carriage on usual	obtain insurance.)		including security
place)		terms. Risk and			related information
		expense buyer’s)			for the import of the
					goods at buyer’s risk
					and expense.

(Continued)

Table 1.1a: Seller’s responsibilities in respect of contract of carriage, insurance, export/import licences/security related information under INCOTERMS 2010 (Continued )

SPECIFIC TERMS	MODE OF	SELLER’S	SELLER’S	SELLER’S RESPONSIBILITY	SELLER’S
	TRANSPORT	RESPONSIBILITY	RESPONSIBILITY IN	IN RESPECT OF EXPORT	RESPONSIBILITY
		IN RESPECT OF	RESPECT OF CARGO	LICENCE/SECURITY	IN RESPECT OF
		CONTRACT OF	INSURANCE	INFORMATION	IMPORT LICENCE
		CARRIAGE
FAS (free alongside	Sea, inland	Same as FCA	Same as FCA above.	Same as FCA above.	Same as FCA above.
ship) (e.g., along-	waterway	above.
side quay, barge)
FOB (free on board)	Sea, inland	Same as FCA	Same as FCA above.	Same as FCA (above).	Same as FCA above.
(delivery n board	waterway	above.
ship at named port
of shipment or
procured goods so
delivered)
CFR (cost and	Sea, inland	Contract or	Same as FCA above.	Same as FCA above.	Same as FCA above.
freight)	waterway	procure at own
(delivery on board		expense on
ship at named port		usual terms
of shipment or		for carriage of
procured goods so		goods by sea to
delivered)		the named port
		of destination on
		usual route in a
		vessel of the type
		normally used for
		the transport of
		the type of goods
		sold.

CIF (cost, insur-	Sea, inland	Same as CFR	Obtain at its own	Same as FCA above.	Same as FCA above.
ance, freight) (deliv-	waterway	above.	expense minimum
ery at named port of			cover provides
shipment)			by Clauses (C) of
			Institute Cargo
			Clauses. To use
			reputable insurance
			company.
			Where buyer re-
			quires extra cover
			(e.g., Clauses (A)
			of Institute Cargo
			Clauses) then this
			to be arranged at
			buyer’s expense.
			Seller to provide
			buyer with insurance
			policy or evidence of
			insurance cover.
CPT (carriage paid	Rail, road, air,	Contract at	None. Seller must	Same as FCA above.	Same as FCA above.
to) (delivery at	sea, inland	own expense	however provide, if
agreed place)	waterway,	for carriage on	requested by buyer at
	multimodal*	usual terms and	his risk and expense,
		usual route to	information required
		destination.	for obtaining insur-
			ance.
CIP (carriage and	Rail, road, air,	Same as CPT	Same as CIF above.	Same as FCA above.	Same as FCA above.
insurance paid to)	sea, inland	(above).
(delivery at agreed	waterway,
place)	multimodal*

(Continued)

Table 1.1a: Seller’s responsibilities in respect of contract of carriage, insurance, export/import licences/security related information under INCOTERMS 2010 (Continued)

SPECIFIC TERMS	MODE OF	SELLER’S	SELLER’S	SELLER’S RESPONSIBILITY	SELLER’S
	TRANSPORT	RESPONSIBILITY	RESPONSIBILITY IN	IN RESPECT OF EXPORT	RESPONSIBILITY
		IN RESPECT OF	RESPECT OF CARGO	LICENCE/SECURITY IN-	IN RESPECT OF
		CONTRACT OF	INSURANCE	FORMATION	IMPORT LICENCE
		CARRIAGE
DAT (delivered at	Rail, road, air,	Contract at own	Same as FCA above.	Obtain at own risk and	Same as FCA above.
terminal)	sea, inland	expense for		expense export licence,
(delivery when	waterway,	carriage to		customs formalities for
goods once	multimodal*	destination.		exportation and transit
unloaded placed				through countries en route.
at buyers disposal
at named port or
place of destina-
tion). Note: terminal
includes quay,
warehouse, road,
rail, air cargo termi-
nal, container yard.
DAP (delivered at	Rail, road, air,	Same as DAT	Same as FCA above.	Same as DAT above.	Same as FCA above.
place)	sea, inland	above.
(delivery when	waterway,
goods placed at	multimodal*
disposal of buyer
on the arriving
means of transport
at named place of
destination)

DDP (delivered duty	Rail, road, air,	Same as DAT	Same as FCA above.	Same as DAT above.	Obtain at own risk
paid)	sea, inland	above.			and expense import
(delivery when	waterway,				licence and carry out
goods placed at	multimodal*				customs formalities
disposal of buyer					for import.
cleared for import
and ready for
unloading)

*Multimodal transport involves transportation using a combination of two or more modes of transport, such as transportation by sea and air or by sea, rail and road.

Table 1.1b: Buyer’s responsibilities in respect of contract of carriage, insurance, export/import licences/security related information under INCOTERMS 2010

SPECIFIC TERMS	MODE OF	BUYER’S RESPONSI-	BUYER’S	BUYER’S RE-	BUYER’S
	TRANSPORT	BILITY IN RESPECT	RESPONSIBILITY	SPONSIBILITY	RESPONSIBILITY IN
		OF CONTRACT OF	IN RESPECT	IN RESPECT OF	RESPECT OF IMPORT
		CARRIAGE	OF CARGO	EXPORT LICENCE	LICENCE
			INSURANCE
Ex works (e.g., seller’s warehouse,	Rail, road, air,	None under	None under	To obtain at own	To obtain at own risk
factory)	sea, inland	INCOTERMS 2010 (it	INCOTERMS	risk and expense	and expense import
	waterway,	will be up to buyer	(it will be in	export licence,	licence. Carry out all
	multimodal*	to sort out transport	buyer’s interest	and carry out	customs formalities
		arrangements)	to take out	all customs	including transit
			insurance on	formalities,
			passing of risk)	including transit.
FCA (free carrier)	Rail, road, air,	Contract at own	None. Same as	None	Same as ex works
(delivery to carrier, or another	sea, inland	expense for carriage	ex works above.		above.
person nominated by the buyer at	waterway,	from named place
the seller’s premises or another	multimodal*
named place)
FAS (free alongside ship)	Sea, inland	Same as FCA above.	None. Same as	None	Same as ex works
(e.g., alongside quay, barge)	waterway		ex works above.		above.
FOB (free on board)	Sea, inland	Same as above.	None (see ex	None	Same as ex works
(delivery n board ship at named	waterway		works above.)		(above).
port of shipment or procured
goods so delivered)
CFR (cost and freight) delivery	Sea, inland	None (see under	None (see ex	None	Same as ex works
on board ship at named port of	waterway	seller’s obligation	works above.)		(above).
shipment or procured goods so		Table 1a above.)
delivered)

CIF (cost, insurance, freight)	Sea, inland	None	None (see under	None	Same as ex works
(delivery at named port of	waterway		seller’s obliga-		(above).
shipment)			tion, Table 1a.)
CPT (carriage paid to) (delivery at	Rail, road, air,	None	None (see ex	None	Same as ex works
agreed place)	sea, inland		works, above.)		(above).
	waterway,
	multimodal
CIP (carriage and insurance paid	Rail, road, air,	None	See CIF above.	None	Same as ex works
to) (delivery at agreed place)	sea, inland				(above).
	waterway,
	multimodal
DAT (delivered at frontier)	Rail, road, air,	None	None (see ex	None	To obtain at own risk
(delivery when goods once	sea, inland		works, above.)		and expense licence,
unloaded placed at buyers disposal	waterway,				and carry out customs
at named port or place of destina-	multimodal				formalities at frontier
tion) Note: terminal includes quay,					and transit as required
warehouse, road, rail, air cargo
terminal, container yard.
DAP (delivered at place)	Rail, road, air,	None	None (see ex	None	Same as DAT above.
(delivery when goods placed at	sea, inland		works, above)
disposal of buyer on the arriving	waterway,
means of transport at named place	multimodal
of destination)
DDP (delivered duty paid)	Rail, road, air,	None	None (see ex	None	None. However,
delivery when goods placed at	sea, inland		works above)		render assistance with
disposal of buyer cleared for	waterway,				obtaining licence/other
import and ready for unloading)	multimodal				official authorisation
					for import at seller’s
					request, risk and
					expense.

*Multimodal transport involves transportation using a combination of two or more modes of transport, such as transportation by sea and air or by sea, rail and road.

58 | STANDARD TRADE TERMS

Table 1.1c: Passing of risk under INCOTERMS 2010

SPECIFIC TERMS	MODE OF	PASSING OF RISK
	TRANSPORT
Ex works	Rail, road, air, sea,	Buyer assumes risk when goods placed at
	inland waterway,	his disposal at agreed delivery point.
	multimodal
FCA (free carrier)	Rail, road, air, sea,	Buyer assumes risk on delivery. Where
	inland waterway,	named place on seller’s premises when
	multimodal	goods have been loaded on the means of
		transport provided by the buyer. In other
		cases, when placed at the disposal of the
		carrier or other person nominated by the
		buyer on the seller’s means of transport
		and ready for unloading.
FAS (free alongside	Sea, inland	Buyer assumes risk on delivery - placing of
ship)	waterway	goods alongside ship on date/within time
		stipulated.
FOB (free on board)	Sea, inland	Buyer assumes risk when goods placed on
	waterway	board vessel nominated by the buyer or by
		procuring the goods so delivered.
CFR (cost and	Sea, inland	Buyer assumes risk when goods placed on
freight)	waterway	board the vessel or by procuring goods so
		delivered.
CIF (cost insurance	Sea, inland	Buyer assumes risk when goods placed on
freight)	waterway	board the vessel or by procuring goods so
		delivered.
CPT (carriage paid	Rail, road, air, sea,	Buyer assumes risk on delivery, that is
to)	inland waterway,	when goods handed over to carrier.
	multimodal
CIP (cost insurance	Rail, road, air, sea,	Same as CPT above.
paid to)	inland waterway,
	multimodal
DAT (delivered at	Rail, road, air, sea,	Buyer assumes risk when goods are un-
terminal)	inland waterway,	loaded by seller and then delivered by seller
	multimodal	by placing them at the buyer’s disposal at
		the named terminal.
DAP (delivered at	Rail, road, air, sea,	Buyer assumes risk when goods are placed
place)	inland waterway,	at his disposal ready for unloading at the
	multimodal	named place of destination or at the agreed
		point at the named place of destination.
DDP (delivered duty	Rail, road, air, sea,	Buyer assumes risk when goods placed at
paid)	inland waterway,	disposal of buyer on the arriving means of
	multimodal	transport ready for unloading at the agreed
		place of destination.

*Multimodal transport involves transportation using a combination of two or more modes of transport, such as transportation by sea and air or by sea, rail and road.