International Contract Terms Defined: FOB, FAS, CIF, and C&F
Nov. 16, 2016
International contracts typically contain shorthand terms (Incoterms) describing when the risk of loss transfers from a seller to a buyer. The most commonly used Incoterms are listed below:
FOB stands for “free on board”. Its use would be “FOB ” where would be the city or place where the goods would be left. This term is typically used in sales contract, and designates a location for the delivery of goods. For example, FOB Dallas means that the seller would provide the goods at the seller’s expense to Dallas. The buyer is responsible for transport of the goods beyond Dallas.
FAS stands for “free along side”. Typical usage would be FAS (Port or Vessel). This means that the seller is responsible for delivering goods to a specific port or vessel. The buyer would then assume the risk of loss once the goods were delivered to the side of the vessel. Once the loading process begins, the risk of loss shifts to the buyer.
CIF stands for “cost insured freight”. This means that the seller will bear the cost of shipping and insurance up to the designation. Common usage would be “CIF Buyer’s address”
C&F means “cost and freight” which means the seller pays for shipping, but not insurance. The buyer would be responsible for all insurance.