In c.i.f. contracts the transfer of property occurs at the moment when the shipping documents are delivered to the buyer.
Under the normal c.i.f. contract, the buyer pays a composite price to the seller to cover the cost of the goods, their insurance, and the freight charges in respect of their carriage. Although the risk of damage or loss passes at the moment the goods cross the ship's rail, the seller's obligation to deliver is not performed until he tenders the shipping documents (i.e. the bill of lading issued by the carrier, the insurance policy, and the seller's invoice for the goods) to the buyer. With the tender of the documents, the buyer's obligation to pay for the goods arises; and with delivery of the documents property in the goods is transferred. Thus delivery to the carrier is clearly not a delivery to the buyer under a c.i.f. contract.
The seller should select a suitable carrier and make sure the goods are safely entrusted to that carrier.
The obligations of the seller do not extend to insuring the goods. The seller should be required to notify the buyer of the facts and circumstances that would enable him to arrange adequate insurance of the goods.
Under a c.i.f. contract the obligation to insure (the goods) merges with the seller's general obligation to obtain the most reasonable terms from the buyer's point of view with the carriers as is possible in the circumstances.
Under c.i.f. contracts payment is due against delivery of the bill of lading and the other documents relating to the carriage of goods.
With respect to c.i.f. contracts there can be no question of inspection (unless specifically provided for in the contract) prior to, or at the time of, shipment. Property passes not on delivery of goods, but on delivery of the shipping documents. Accordingly the first opportunity that the buyer has of examining the goods is when they are unloaded.
In c.i.f. contracts the property passes when the shipping documents are transferred to the buyer, although the risk passes as soon as the goods cross the ship's rail at the port of loading.
Under a f.o.b. contract the seller's obligation is to place the goods free on board ship, usually a vessel nominated by the buyer. In this situation, the risk passes at the moment of loading, and delivery is effected once the goods are on board.
The obligations of the seller do not extend to insuring the goods. The seller should be required to notify the buyer of the facts and circumstances that would enable him to arrange adequate insurance of the goods.
Under a f.o.b. contract the obligation to insure (the goods) merges with the seller's general obligation to obtain the most reasonable terms from the buyer's point of view with the carriers as is possible in the circumstances.
Unless the seller expressly undertakes to arrange for shipment of the goods, has no part to play.
It is the buyer's obligation to name the ship.
Delivery takes place under when the goods are placed on board ship
The place of inspection is left in uncertainty. Inspection should take place at the destination of the goods.