This Article is a detailed assessment of the role of, and parties’ obligations in, CIF insurance under Incoterms and common law jurisdictions. One of the CIF seller’s key obligations is to insure goods in transit against risks of loss, damage and rejection or non-payment by buyer. The insurance obligation is so crucial that in international business transactions, no bank would agree to finance a CIF buyer or seller’s transactions without proof of insurance. The full extent of those insurance duties result from the nature, history and development of the CIF commercial terms compared to the FOB. The duties, governed by Incoterms, have been interpreted by courts in Anglo-America and other common law jurisdictions both before and after the first Incoterms in 1936. Common law cases on the subject are complemented by customs and usages, various Commodity Trade Standard Rules and the Institute Cargo Clauses. Because of their common heritage, with few modifications, parties’ CIF insurance obligations are the same in all Anglo-American and other common law jurisdictions. Although at first those obligations may appear straightforward in a written contract, however, in practice and detailed examination, they turn out to be much more complex. Accordingly, traditional assumptions on the ease and apparent simplicity of the obligations can be misleading. Following earlier similar coverage of FOB insurance elsewhere(Ademuni-Odeke, 2007), this Article scrutinizes parties’ CIF insurance obligations under Incoterms as applied under Anglo-American and other common law jurisdictions, compares it with FOB insurance on the one hand and with CIF insurance practice in selected civil law and other non-common law jurisdictions on the other. The Article, therefore, challenges traditional assumptions, provides an in-depth analysis of the nature and full extent of the duties, prescribes practical solutions where there are lacunae and concludes that there are far more attention and careful consideration required for parties’ CIF insurance considerations than is contained in a written contract and/or is apparent in existing literature. The Article argues that, all factors considered, CIF parties should view their contractual undertaking, common law principles and Incoterms provisions only as prima facie and minimum guidelines.
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