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Marine Cargo Insurance > At Whose Risk?

The Terms of Sale in an Import or Export contract define the point at which ownership of goods transfers from Seller to Buyer, and therefore dictate the duration and extent of cover, each party needs to buy.

Terms of Sale are central to Cargo Insurance and are possibly the most common cause of confusion.

Our Service Team are always happy to give more detailed explanations and advice.

The following diagrams illustrate the responsibilities associated with the most frequently used Terms of Sale.

Ex Works

"Ex works" means that the seller's only responsibility is to make the goods available at his premises (i.e. works or factory). In particular he is not responsible for loading the goods in the vehicle provided by the buyer, unless otherwise agreed. The buyer bears the full cost and risk involved in bringing the goods from there to the desired destination. This term thus represents the minimum obligation for the seller, and therefore the maximum for the buyer.

FOB

FOB means 'Free on Board' .The goods are placed on board a ship by the seller at a port of shipment named in the sales contract. The risk of loss of or damage to the goods transfers from the seller to the buyer when the goods pass the ship's rail.

C&F/CFR

'Cost and Freight'. The seller must pay the costs and freight necessary to bring the goods to the named destination, but the risk of loss of or damage to the goods, transfers from the seller to the buyer when the goods pass the ship's rail in the port of shipment. For insurance purposes the position is therefore similar to FOB, see above.