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Types of Contarcts

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Types of Contarcts

Are you all set to deliver the goods? Well, if that is the case, then you need to first get a somewhat familiar idea about the different kinds of contracts. Let us take a look at some of them:

  • FAR or FAS:
  • Free Along with Rail and Free Alongside Ship are the two types of contract that you may have to come into terms with while delivering a product. Under far contracts or FAS, you will find that the seller delivers the goods through rail or ship and notifies the buyer immediately on delivering the same. The goods is transferred in the buyers name immediately when the seller gets them delivered through rail or ship. Soon after this, it is the responsibility of the buyer to take care of the goods insurance and contract of affreightment.

  • FOR or FOB:
  • Free on Rail and Free on Board are the other types of contract that you may be in need of. This kind of a contract usually comes into use to people who deliver goods on rail or ship. In this case, you as a seller would have to meet all the expenses starting from the shipment of the goods. The buyer on the other hand, will take care of the insurance of the goods, the freight expenses and other subsequent expenses.

    However, no sooner than you board the goods on the ship, the ownership of the same are automatically transferred to the buyer. This condition is also applicable if the goods are not ascertained or specified. Here, the buyer has to take up the ownership of all the expenses once the goods have been transferred. But then, there are cases when the buyer may not deserve the right of ownership to properties, this is applicable when the seller still pursues the right of disposal by his side.

  • CIF:
  • This contract revolves around cost, insurance as well as freight. According to this contract, you will find that the seller has to take up the responsibility of insuring the goods as well as arranging for affreightment, making the deliveries to the shipping company, sending the bill of laden and lots more to name. Generally speaking, in most cases you will find that the bank will deliver the documents once the seller has cleared all the payments. Once the back delivers all the relevant documents, the ownership of the goods is automatically transferred to the buyer. The buyer on the other hand is well protected and is in safe hands as all he needs to do is make the payment against the documents. The very moment he makes the payment, he can get hold of all the documents as a result of which he can get hold of the deliverable goods as well. However, during the course of delivery, if the goods are lost or stole, then neither the seller nor the buyer are at a loss. Instead, they can always count on their insurance company for compensation.

Last, but not the least you will also come into terms with ex-ship contracts wherein, the seller delivers the goods at the port of destination. In such cases, under no circumstances will the goods be passed until the actual delivery is made. Hence, during such circumstances, the seller is responsible to keep the goods insured.

Related Topics:

  • Sale of Goods Act

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