Depending on the terms of the contract of sale
contract, risk may terminate at different stages of the shipping process.
FOT (can be either CY or CFS). The buyer or their agent takes delivery
at an inland place, probably at the seller's mill or warehouse, the receiving
station or on the carrier's truck. No risk of physical damage or destruction
attaches to the exporter after this point, but the exporter remains responsible
for errors or omissions that occurred while the goods were under their care and
responsibility.In other words, if you deliver an
FCL container that is unsuitable (e.g. tainted) then you remain responsible for
all the consequences. The same goes for short weights beyond the permitted
tolerance. But if the container is stolen after it leaves the premises, then the
loss is not the responsibility of the exporter.
CFR). As discussed in chapter 4,
Contracts, there are differences between FOB according to Incoterms and FOB as
per the ECC and GCA contracts for coffee. In insurance terms:
ECC then goes on to state that 'the sellers shall
have the right to the benefit of the policy until the documents are paid for'.
This ensures that the exporter has recourse to the buyers' insurance policy in
case the goods or the container itself are damaged, destroyed or stolen between
the time the container is placed in the export stack in the port and its receipt
Under GCA contracts, however, title to the goods is
transferred when they cross the ship's rail and the shipper is therefore obliged
to insure up to this point. The structure of the American coffee trade is
different from that in Europe: the vast majority of American roasters buy coffee
'ex dock' so it is the trade house or importer that deals with marine insurance
matters whereas in Europe many roasters buy basis FOB.
addition to paying the ocean freight the shipper must also arrange and pay for
an insurance that must be in conformity with the stipulation of the European
Contract for Coffee: warehouse to warehouse, all risks including SRCC (strikes,
riots, civil commotions commodity trade) risk and war risks at a value of CIF +
5%. (For more on this see 04.05.05 - very few CIF sales take place