c.i.f.

Abbreviation for Cost, Insurance, and Freight. It is the basis of an export contract in which the seller pays the cost of shipping the goods to the port of destination and of insuring the goods up to this point. On a c. i. f. contract, the seller sends the documents giving title to the goods to the buyer, usually through a bank. These documents include the bill of lading, the insurance policy, the commercial invoice, and sometimes such additional documents as a certificate of origin, quality certificate, or export licence. In order to obtain the goods the buyer is obliged to pay for the documents when they are presented. It is said that with a c. i. f. contract the buyer is paying for documents rather than goods, because provided the documents are in order, there is an obligation to pay for them even if the goods themselves have been lost at sea during the voyage. In these circumstances the buyer would hold the insurance policy which would provide recompense for the lost goods. Compare c & f; c.i.f.c.i.; free on board