Types of Contract of Sale
Some terms and concepts used when quoting for goods and accepting the quotations are given. Some terms and concepts include CIF, COD, Ex-ship, FOB, etc. These terms have legal implications and represent different types of contracts of sale.
Therefore, types of sale of goods contracts include the following:
1. Open Contracts without Restrictive Terms: where no express restricting terms are used on the quotation, invoice, etc or where terms such as “Cge pd” (carriage paid) are specified in the contract, delivery of goods to a carrier is deemed by the sale of goods Act as delivery to the buyer.
2. C.I.F Contracts: C.I.F means costs, insurance, and freight. This means that the price paid by the buyer includes the cost of the goods as well as insurance and cost of carriage of the goods.
3. COD Contracts: COD means cash on delivery. This means that the buyer must pay cash at the point of delivery in exchange for the goods.
4. Ex-ship Contract: According to the sale of goods Act, ex-ship means that the seller has to deliver goods to the buyer from a ship at the port of destination. The goods are at the seller’s risk during the voyage.
The legal implication of ex-ship terms of sale are as follows:
a. The cost of the goods includes insurance and freight.
b. Ownership and title to the goods remains with the seller until the buyer takes delivery of goods.
c. The buyer will take delivery of the goods from the ship at the port of destination and will, therefore, be responsible for paying warehousing and customs duties.
d. If the goods are damaged on transit or lost, the seller takes responsibility for the loss.
5. FOB Contracts: FOB means free on board. It means that the seller undertakes to place the goods on the ship chosen by the buyer who pays the freight and cost of insurance.