Free On Board (FOB) Contracts

• The buyer is entitled and bound to nominate a ship to the seller calling during the agreed period.
• The seller is bound at his own expense, to have the goods on the ship nominated by the buyer.
• The seller is bound at his own expense, to give such notice to the buyer.
• The seller is not bound to effect any insurance on the goods.
• The seller is bound to transmit to the buyer bills of lading by which the goods are deliverable to the buyer.
• The risk of the goods passes to the buyer when they are shipped.
  (4 points at 1 mark each = 4 marks)

Cost, Insurance, and Freight (CIF) Contracts

• The seller is bound at his own expense to ship the goods during the period, if any, to the port agreed upon or to acquire goods afloat which have been so shipped.
• The seller is bound, at his own expense, to effect on the goods an insurance of the type normal for goods and voyage of the kind in question.
• The seller is bound to transfer to the buyer proper shipping documents in accordance with the terms of the contract.
• The buyer is bound to take up proper shipping documents and, on doing so, to pay the price in accordance with the terms of the contract.
• The goods are deemed to be delivered to the buyer, and the property therein accordingly passes to the buyers, on the transfer to him of the bills of lading.
• The risk in the goods passes to the buyer when they are shipped or acquired afloat.
  (4 points at 1 mark each = 4 marks)