SolvedOT05100 | PRT: computation - CIF sales - outline
From HM Revenue & Customs · Oil Taxation Manual
Contracts for the sale of crude oil, condensates and LPGs invariably contain terms for delivery, for assumption of risk and for liability for transportation and insurance. The commonest are:
| No. | Contract | Terms |
|---|---|---|
| 1 | FOB | (Free On Board): Property and risk pass to the buyer as the oil is loaded into the tanker at the terminal and the buyer is liable for any costs of further transport and insurance. |
| 2 | CIF | (Costs, Insurance and Freight) Although risk passes to the buyer at the loading terminal, the seller remains liable for costs, insurance and freight until the oil is discharged at the tanker’s destination. Property passes with the documents, i.e. when the cargo is at sea. |
| 3 | C&F | (Costs and Freight) Similar to CIF except that the seller is not liable for cargo insurance. |
| 4 | Delivered | Property and risk pass on delivery at the port of destination and the seller is liable for all costs to that point. |