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Dear tutor,
in this example, I think under FOB, FAS and CIF Javine must bear the risk because the risk passes from the seller once the goods are placed on the ship. But why they explain that under both CIF and CIP, the seller must be responsible?
I remember that under CIF even though the seller is responsible for cost, insurance and freight, but the risk already passes to the buyer when the goods are placed on the ship.“Javine and Katrina entered into a contract for the sale of goods. Katrina loaded the goods onto a ship for delivery to Javine, who was supposed to pick them up at the destination port. A storm occurred during the voyage and the ship carrying the goods sank. The main issue is determining who had responsibility for the goods at the moment they were lost, and therefore who must absorb the financial loss. The previously mentioned ICC Incoterms help clarify when the risk transfers from seller to buyer. For instance, under FOB or FAS terms, Javine would have borne the risk when the ship went down. But under CIF or CIP terms, Katrina would likely have carried the risk instead.”
Thank you!
You write ‘I remember that under CIF even though the seller is responsible for cost, insurance and freight, but the risk already passes to the buyer when the goods are placed on the ship.’
In fact, under CIF, the seller bears the risk right up until the carrying ship (or plane of other type of carriage) arrives at the destination port.
Under CIP, the seller bears the risk right up until the goods arrive at the designated place of delivery.
So, in the case of Javine and Katrina, it’s Javine that has to bear the loss!
OK?
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