Cost and Freight: two places in one term

The cost line and the risk line separate

One named port fixes where the goods are delivered and where the buyer's exposure begins; a second named port fixes how far the seller's freight obligation runs. That is why contracts using this rule should identify both. Where only the destination is named, the parties have agreed the cost undertaking and left the delivery point to be inferred, which is precisely the ambiguity that produces claims after a casualty at sea.

Consequences of the split

A vessel casualty, a general average declaration or heavy weather damage during the voyage falls on the buyer, who may have assumed the seller's freight payment implied the seller's responsibility. The buyer therefore needs cargo cover running from the moment of loading, not from arrival. A buyer that discovers this after a loss has an uninsured exposure and a seller who has performed its obligations completely.

No insurance obligation on either side

This rule requires nobody to insure. The seller's undertaking is to contract carriage on usual terms by a vessel of the type normally used for the goods, and to pay the freight; the exposure sits with the buyer from loading. Where a buyer wants the seller to arrange cover, the term with an insurance obligation should be used instead of adding words to this one.

Discharge and destination charges

Whether unloading at the destination port is included depends on the carriage contract the seller concludes, and buyers frequently find themselves billed for handling they assumed was inside the freight. The workable approach is to state in the sale contract which destination charges are for the seller's account. Adding a bare word such as landed to the term without defining it creates a new obligation whose scope neither party can state precisely.

Frequently asked questions

When does the buyer's exposure begin?

When the goods are on board at the port of loading. The freight the seller has paid takes the cargo further, but the responsibility for loss or damage has already moved, which is why the buyer needs cover in place before the vessel sails.

Can the buyer choose the carrier?

No, the seller contracts the carriage under this rule. A buyer with strong views about the carrier, the routing or the transit should either use a term where it contracts the main carriage itself or specify requirements in the sale contract.