All You Need to Know About FOB and CIF Contracts.
The significance of standard trade terms such as CIF and FOB in international commercial contracts. The financing of international sale contracts. The relationship of the carriage of goods by sea contract to the international sale contract. The importance of jurisdiction and choice of law to the different contracts.
The freight adjustment factor is designed to allow CIF and FOB cargoes to play an equivalent role in the Dated Brent benchmark. A CIF offer differs from FOB in that it includes transportation time, freight costs, and different types of optionality. All three of these elements are accounted for when calculating an equivalent FOB value. First.
The discussion revolves around whether a CIF contract is a sale of goods or a sale of documents pertaining to the goods or both. A CIF contract is a cost, insurance and freight contract. Under a CIF contract the seller is required to arrange the carriage of the goods and their insurance in transit, and the cost of those arrangements is included in the contract price.
The date when the contract comes into force is the one that appears in its header, as mentioned in the final paragraphs of the contract, before signatures (This Contract comes into force on the date written above). In some contracts -for example in the Supply Contract- the date of coming into force is also mentioned in one of the clauses.
The f.o.b. contract is more like a domestic sale except that delivery is to be made on board a vessel. However, f.o.b. contracts frequently make provision for the seller to tender shipping documents as a condition of payment and where that is the case the seller's obligations under the f.o.b. contract are very similar to those of a c.i.f.
FOB Free On Board (.Named Port of Shipment) CFR Cost and Freight (.Named Port of Destination) CIF Cost, Insurance and Freight (.Named Port of Destination) Incoterms Rules and Standards Incoterms only relate to trade terms in the contract of sale between the buyer and seller and do not deal with the contract for carriage, or convey title.
Using Incoterms in a sales contract or purchase order. If you use Incoterms in the sales contract or purchase order, it's advisable to identify the appropriate Incoterm Rule (e.g. FCA, CPT, etc.), state 'Incoterms 2010' and specify the place or port for delivery as clearly and precisely as possible. Terms for any transport mode.