CIP is similar to CIF, and its price composition includes the usual freight and agreed insurance premium. Moreover, contracts concluded with these two terms belong to shipping contracts. However, there are obvious differences between CIP and CIF terms in terms of delivery place, risk division boundary and responsibilities and expenses borne by the seller, which are mainly manifested in the following aspects: CIF is suitable for waterway transportation, delivery place is at the loading port, and risk division is bounded by the ship at the loading port. The seller is responsible for chartering and booking the shipping space, paying the freight from the port of shipment to the port of destination, handling the water transportation insurance and paying the insurance premium. CIP terms are applicable to all modes of transportation, and the place of delivery should be agreed by both parties according to the different modes of transportation. The risk is to transfer the goods while the carrier is in control of the goods. The insurance covered by the seller is not only marine insurance, but also various transportation risks.
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The cost of CIP is different from that of CIF. For example, if the destination designated by the consignee is an international air transport airport (as stipulated by IATA) that can be directly reached or transshipped in Singapore, such as Beijing International Airport, Shanghai Pudong International Airport and Nanjing Road International Airport. There is no substantial difference in cost between the above two terms. Because according to international practice, any expenses incurred after the goods arrive at the destination airport are borne by the consignee, that is, the buyer, such as delivery fee, storage fee, labor fee, etc. If the destination designated by the consignee is not the international airport, but a domestic inland city (such as Wuxi, Jiangsu, Jiaxing, Zhejiang) or a factory designated by the consignee, the CIF clause cannot be used, and only the CIP clause can be used.
CIF is a "port-to-port" clause, and the air transport mode can be applied from airport to airport. CIP clause applies to "multimodal transport" of any mode of transport, and the shipper will bear the insurance premium and freight to the "de facto destination". It is generally unacceptable for airlines to use CIP terms. Usually only air freight forwarders can complete the above transportation tasks.
However, in practice, because CIF is too "deeply rooted in people's hearts", many practical businesses still use CIF, and CIP terms should be used in theory. For example, if the destination of CIF is an inland city, then combined transport is inevitable, but there are countless examples of using CIF instead of CIP at this time. For example, CIP is used for air transportation, but most of them are CIF. Therefore, I personally think that as long as the buyers and sellers know each other's rights, obligations, responsibilities and cost sharing methods in the contract or in actual business practice, there is no need to generate too many disputes if CIF or CIP is adopted. Of course, it is best to use trade terms correctly in full accordance with the relevant regulations of the International Chamber of Commerce. But if the other party doesn't understand or insist for no reason, we must use CIF when using CIP, and we can agree. The key is to clearly define the division of expenses, responsibilities and obligations in the contract, leaving no loopholes for others.
Risk and insurance. For the contract concluded in accordance with CIP terms, the seller shall be responsible for handling freight insurance and paying the insurance premium, but the risks of the goods on the way from the place of delivery to the destination shall be borne by the buyer. Therefore, the seller's insurance is still an agent. According to the interpretation of the General Principles, under normal circumstances, the seller shall take out insurance according to the risks determined by both parties through consultation. If both parties have not agreed on the risks to be insured in the contract, the seller shall insure the minimum risks according to the usual practice, and the insurance amount is generally 65,438+00% of the contract price, that is, 65,438+065,438+00% of the CIF contract price, and the insurance shall be carried out in the contract currency.
The price should be reasonably determined. Compared with FCA, the seller has to bear more responsibilities and expenses under CIP conditions. Responsible for handling the transportation from the place of delivery to the destination, and bear the relevant freight; Handle freight insurance and pay insurance premium. These are all reflected in the price of goods. Therefore, when the seller makes an external quotation, he should carefully calculate the cost and price. In accounting, we should consider transportation distance, insurance risk, various modes of transportation and various insurance costs, and predict the changing trend of freight rate and insurance premium.
References:
Baidu encyclopedia: CIF, Baidu encyclopedia: CIP