Write the following in full and explain their... | WAEC SSCE - Commerce - 1998 (Essay)

Question 1 Report

Write the following in full and explain their meanings:
(a) C.I.F.
(b) F.O.B.
(c) F.A.S.
(d) F.O.R.
(e) C.F.

Answer

These are shipping and price-quotation terms used in foreign (overseas) trade to show what costs the seller has included in the quoted price.

(a) C.I.F. - Cost, Insurance and Freight. The quoted price includes the cost of the goods, the insurance premium and the freight (carriage) charges to the buyer's named port of destination. The seller bears these charges until the goods reach that port.
(b) F.O.B. - Free On Board. The seller's price covers all charges up to the point where the goods are loaded on board the ship. Once loaded, the buyer bears freight, insurance and all other charges.
(c) F.A.S. - Free Alongside Ship. The seller's price covers all charges of delivering the goods alongside the ship at the port of shipment. From that point (loading, freight, insurance) the buyer bears the costs.
(d) F.O.R. - Free On Rail. The seller's price covers the cost of the goods and their delivery loaded onto the railway wagon at the departure station. Thereafter the buyer bears carriage and other charges.
(e) C.F. (C. & F.) - Cost and Freight. The quoted price includes the cost of the goods and the freight to the destination port, but not insurance; the buyer arranges and pays for the insurance himself.

Answer Details

These are shipping and price-quotation terms used in foreign (overseas) trade to show what costs the seller has included in the quoted price.

(a) C.I.F. - Cost, Insurance and Freight. The quoted price includes the cost of the goods, the insurance premium and the freight (carriage) charges to the buyer's named port of destination. The seller bears these charges until the goods reach that port.
(b) F.O.B. - Free On Board. The seller's price covers all charges up to the point where the goods are loaded on board the ship. Once loaded, the buyer bears freight, insurance and all other charges.
(c) F.A.S. - Free Alongside Ship. The seller's price covers all charges of delivering the goods alongside the ship at the port of shipment. From that point (loading, freight, insurance) the buyer bears the costs.
(d) F.O.R. - Free On Rail. The seller's price covers the cost of the goods and their delivery loaded onto the railway wagon at the departure station. Thereafter the buyer bears carriage and other charges.
(e) C.F. (C. & F.) - Cost and Freight. The quoted price includes the cost of the goods and the freight to the destination port, but not insurance; the buyer arranges and pays for the insurance himself.

Write the following in full and explain their meanings: (a) C.I.F. (b) F.O.B. (c) F.A.S. (d) F.O.R. (e) C.F.