A cost, insurance, and freight (CIF) agreement is a legal document that lists the cost of goods, insurance, and freight for shipments. The document's purpose is to protect the buyer in case of loss or damage during transit. CIF agreements are typically used for international B2B shipments.

The CIF agreement outlines what costs the seller is responsible for and when that responsibility is transferred to the buyer.

The CIF is strictly used in seaway and waterway shipments.

Responsibilities of a seller

• Paying for export licences and providing inspection of products
• Paying for shipping and loading of the goods to the seller’s port
• Covering the packaging costs
• Covering customs clearance fees for exporting
• Covering costs of shipping from the seller’s to the buyer’s port
• Covering the insurance costs up until the destination port
• Paying for any damaged goods

Responsibilities of a buyer

• Unloading the products at their destination
• Moving the products to the delivery site
• Covering customs clearance fees for importing

Transfer of risk

Under a CIF contract, the seller agrees to transfer the risks associated with the goods to the buyer once the goods are loaded onto the transport vehicle.

This means that if the goods are damaged or lost in transit, it is the buyer who is responsible for any losses, not the seller. While this may seem like a disadvantage for buyers, it is actually a very important protection.

By transferring the risks to the buyer, the seller is ensuring that the buyer will receive the goods in the condition that they were in when they were loaded onto the transport vehicle. This provides certainty for both buyers and sellers and helps to avoid disputes.