WORKSHOP 6 - CIF

Cif stands for cost, insurance and freight. it is the seller's obligation to ship the insured contractual goods to the agreed destination under a CIF terms contract and the buyer may also purchase goods afloat, which are already bound for that destination.

The advantages are, seller does not bear any risk during transits of goods because the buyer still has to fulfil his contractual duties regardless the goods arrive or lost. However, buyer can try to get redress against the carrier and insurer by producing the tendered documents (Arnold Karberg)

Buyer has to arrange for import licenses and pay any import duties and charges at the port of destination. Seller will get his payment by tendering valid documents regardless the goods arrive or lost.

If the buyer purchase goods afloat, the buyer still bearing the risk because the presumptions of s 20 and s 32(1) of the SoGA 1979 do not apply.

The disavantages are the seller has to bear the risk of fluctuation in the cost of carriage and insurance.

If the seller fails to ship the goods, tender the documents of the goods does not arrive at the destination on time would result in breach of condition in each case (Bunge Corporation)

Buyer has the right to reject goods on a valid ground and claim for repudiation and damages for non-delivery (Kwei Tek Chao & Others)

In conclusion, CIF contract provide a fair protection to both seller and buyer.


(251 words)

Workshop 6 (summary)

Generally speaking, free on board (FOB) contract is a type of contract of the international sale of goods in which the seller's duty is fulfilled by placing the goods on board a ship.

The term FOB have three variations which is first variation, classic FOB contract occurs when the seller put the goods on board while the buyer nominating a vessel. The second variation is FOB with additional service, whereby the seller makes the shipping and insurance arrangements for the buyer's account, with the seller nominating a suitable ship. While the last and most common form of FOB is the modern FOB, occurs with the buyer nominating the vessel and making the contract of carriage.

Looking into the advantages of an FOB contract offers to the buyer whereby the cost for FOB is lower. An FOB purchase "presumably" covers only the cost of goods at the FOB point. By nominating the ship, and presumably by contracting with the seller, the buyer could get a better deal. As for the seller, they will be benefited through the FOB contract at times when the carriage cost is high or likely to fluctuate because the buyer must bear the risk of changes in the cost of carriage.

However, there are also disadvantages to the buyer whereby there are burdensome duties imposes on the buyer especially the buyer who lack of information and expertise needed to perform these tasks himself. As for the seller, he must bear the full liability for the cost and safety of the goods until the point of their passing the ship's rail.

As a concluding remark, there are risks that both buyers and sellers have to consider before deciding into a FOB contract and take into account all the factors and evaluate the contract in terms of security and benefits.

(300 words)

workshop 3 -summary

Fairtrade involves an increasing dependency on foreign trade and participation of developed and developing countries. It focuses on helping producers in developing countries by marginalizing a minimum price for the products.

            Article 23 of the 1948 Universal Declaration of Human Rights justify that every human are subject to fair and favourable remuneration for work. This can be promoted through the fair trade with fairer contribution of commercial revenue into international trade of developing countries.

         Fairtrade connects disadvantages producers and consumers promote fairer trading conditions and empower producers to combat poverty, strengthen their position in world .However, it only empowers and certifies small-scale farmer organizations.

Fairtrade is now well-marketed in the commercial sector. As a result, Fairtrade has a strong global grassroots consumer base and sales of fair trade certified products is experiencing a massive growth over the years. There’re more producers benefited by Fairtrade scheme.

Fair trade seems to fulfill the establishment of fairtrade initiatives to be ‘fair’ as it creates a transparent equity between producers, sellers and consumers, also to empower small-scale producers to walk out of poverty.

However,contradicting report states out that the Fairtrade is unfair. The higher price set for fair-trade goods, come at the expense of the great majority of farmers who unable to qualify for Fairtrade certification.

            Further, Fairtrade does not aid economic development. It only keeps the poor in their place, sustaining uncompetitive farmers on their land and holding back diversification, mechanization, and moves up the value chain. This indirectly denies future generations the chance of a better life. This will impair Fairtrade to continue its establishment to fight against poverty.

           Along with the arguments, it was suggested that the fair-trade shall not be deemed as unfair as it starts from a good initiatives to give benefits. Appropriate reforms are indeed crucial for a promising future in the fair-trade trading scheme.

(297 words)