What do “CIF” and “FOB” mean?
These are two of the internationally accepted commercial terms known as International Commercial Terms or incoterms used in international transactions. The terms specify and define the obligations for the buyer and seller, respectively, for delivering goods in international contracts. It is of the utmost importance that you understand the meanings of the various incoterms when quoting and in subsequent transactions. For example, CIF stands for Cost, Insurance and Freight – Title and risk pass to buyer when delivered on board the ship by seller who pays transportation and insurance cost to destination port. FOB stands for Free On Board – Risk passes to buyer including payment of all transportation and insurance cost once delivered on board the ship by the seller.
