C.I.F. Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of C.I.F., written in plain English, along with examples of how it is used.

What is C.I.F.?

(n) CIF is the abbreviation used for cost insurance and freight representing the price of the material shipped is inclusive of all cost and risk till it reaches the destination. In CIF risk lies with the seller till it reaches the destination said in the agreement as the insurance is paid by the seller.

History and Meaning of C.I.F.

CIF is an acronym that stands for Cost, Insurance, and Freight. It is a term used in international trade to indicate a type of contract where the seller bears the costs and takes responsibility for the good until they are delivered to the destination port. The term C.I.F. has its origins in the Incoterms (International Commercial Terms) which were first published in 1936 by the International Chamber of Commerce (ICC) based in Paris, France.

In the CIF contract, the seller ensures that the goods are insured during the transit, and the insurance costs are also included in the price of the goods. The buyer bears the costs and risks of unloading the goods, as well as any customs duties or taxes that may apply upon arrival.

Examples of C.I.F.

  1. A company in France purchased a shipment of goods from a supplier in China on CIF terms. The price agreed upon included the cost of the goods, insurance, and freight charges up to the port of Marseille. The supplier took care of all the documentation and paid for the insurance to cover the goods during the voyage.

  2. An exporter in the USA entered into a CIF contract with a buyer in South Africa for the sale of used machinery. The seller was responsible for loading the machinery on board and delivering it to the port in Durban, South Africa. The buyer had to arrange for the customs clearance and pay any import taxes before taking delivery of the goods.

  3. An importer in the UK received a shipment of wine from a supplier in Italy shipped on CIF terms. The freight forwarder who delivered the goods notified the consignee of damage to some of the bottles. As the insurance was arranged by the seller, the importer filed a claim with the insurance company to recover the cost of the damaged goods.

Legal Terms Similar to C.I.F

  1. FOB (Free on Board): The seller is responsible for the cost and transport of the goods to the port of shipment, but the buyer takes responsibility for the goods once they are on board the vessel.

  2. EXW (Ex-Works): The buyer is responsible for all transport costs, documentation, and risk from the moment the goods leave the seller’s premises.

  3. DAP (Delivered at Place): The seller is responsible for all costs of transport, delivery, and insurance to a named place of destination, but the buyer bears the costs and risks after the goods arrive at the named place.