Basic obligations of buyers and sellers under the terms CIP, CPT, FOB, CFR, CIF and FCA

In international trade, different trade terms stipulate different rights and obligations of buyers and sellers. This article will introduce the basic obligations of buyers and sellers under the six trade terms CIP, CPT, FOB, CFR, CIF and FCA.

CIP – Carriage and Insurance Paid to (named place of destination)

CIP means that the seller delivers the goods to the designated carrier and pays the freight and insurance for transporting the goods to the destination.

• The seller’s obligations: Responsible for transportation arrangements, handling cargo transportation insurance and paying fees; delivering the goods to the carrier on time and notifying the buyer; assuming all risks and expenses before delivery; obtaining export documents and Handle the necessary procedures for export; provide relevant documents such as invoices, insurance policies, etc.
• Buyer’s obligations: receive documents and goods and pay for them; bear the risks after delivery; handle import procedures at their own expense.

CPT – Carriage Paid to (named port of destination)

CPT requires the seller to pay the freight to transport the goods to the destination.

• Seller’s obligations: Sign a transportation contract and pay the freight; hand over the goods to the carrier and notify the buyer; bear pre-delivery risks; handle export formalities; submit documents to the buyer.
• Buyer’s obligations: Accept the documents and goods and pay the price; bear the risks after delivery; handle the import procedures by yourself.

FOB – Free on Board (named port of shipment)

Under the FOB term, the seller completes delivery when the goods are loaded onto the ship at the designated port of shipment, after which the risk is transferred to the buyer.

• The seller’s obligations: Load the goods on board the ship at the port of shipment and notify the buyer; bear the risks and expenses before shipment; handle export procedures; provide documents.
• Buyer’s obligations: Charter a ship or book space and pay freight; bear the risks and expenses after shipment; handle insurance and import procedures.

CFR – Cost and Freight (named port of destination)

The CFR term stipulates that the seller pays the freight to the port of destination, and the risk is transferred to the buyer after shipment.

• The seller’s obligations: Sign a transportation contract and pay the freight; load the ship at the shipping port and notify the buyer; bear the risks before shipment; handle export procedures; submit documents.
• Buyer’s obligations: handle insurance and import procedures; bear the risks after shipment; receive documents and goods and pay the price.

CIF – Cost Insurance and Freight (named port of destination)

CIF requires the seller to pay the freight and insurance to the port of destination.

• The seller’s obligations: Sign a transportation contract and pay the freight; load the ship at the shipping port and notify the buyer; bear the risks before shipment; apply for insurance; and submit documents.
• Buyer’s obligations: Accept documents and goods and pay the price; bear the risks after shipment; handle import procedures.

FCA – Free Carrier (named place)

FCA terms apply to various modes of transportation. The seller completes delivery when the goods are handed over to the carrier.

• Seller’s obligations: Deliver the goods to the carrier at the designated place and notify the buyer; bear pre-delivery risks; handle export formalities; submit documents.
• Buyer’s obligations: Sign a transportation contract and pay the freight; receive the goods and pay the price; bear the risks after delivery; handle import procedures.

The above introduces the basic obligations of buyers and sellers under six common international trade terms. Understanding these contents will help to better conduct international trade activities.