Explain the terms: (i) FOB, (ii) CIF.

Explanation

(1.) FOB, "Free On Board", is a term in international commercial law specifying at what point respective obligations, costs, and risk involved in the delivery of goods shift from the seller to the buyer under the Incoterms standard published by the International Chamber of Commerce.



(2. ) Cost, Insurance, and Freight (CIF) is an expense paid by a seller to cover the costs, insurance, and freight against the possibility of loss or damage to a buyer's order while it is in transit to an export port named in the sales contract. Until the loading of the goods onto a transport ship is complete, the seller bears the costs of any loss or damage to the product. Further, if the product requires additional customs or export paperwork or requires inspections or rerouting, the seller must cover these expenses. Once the freight loads, the buyer becomes responsible for all other costs. It is similar, but different to Carriage and Insurance Paid To (CIP).