Legal Definitions - C.F.

C.F. stands for Cost and Freight. This is an international shipping term (often referred to as an Incoterm) used in contracts for the sale of goods. When a contract specifies C.F. to a named port of destination, it means that the seller is responsible for paying the costs and freight necessary to bring the goods to that named port. However, the risk of loss or damage to the goods, as well as any additional costs, transfers from the seller to the buyer once the goods have been loaded onto the vessel at the port of shipment.

• Scenario 1: Electronics Shipment

  A technology company in Shenzhen, China, sells a large order of computer components to a distributor in Los Angeles, USA. Their contract specifies "C.F. Port of Los Angeles." This means the Chinese seller pays for the cost of the components and arranges and pays for their shipment by sea freight all the way to the Port of Los Angeles. However, once the components are loaded onto the cargo ship in Shenzhen, the risk of any damage or loss during the ocean voyage shifts to the American distributor. If the ship encounters a storm and some components are damaged en route, the distributor, not the seller, would bear that financial risk and would need to file a claim with their own insurance.

• Scenario 2: Coffee Bean Export

  A coffee exporter in Santos, Brazil, agrees to sell several containers of green coffee beans to a roasting company in Hamburg, Germany, under "C.F. Port of Hamburg" terms. The Brazilian exporter is responsible for the cost of the coffee beans and for paying the shipping charges to transport them to the port in Hamburg. Once the coffee beans are loaded onto the vessel in Santos, the German buyer assumes the risk. If, for instance, there's an unexpected delay at a transshipment port that incurs demurrage charges, or if a portion of the beans spoils due to a refrigeration unit malfunction after loading, the German buyer would be responsible for those additional costs or losses, not the Brazilian seller.

• Scenario 3: Industrial Machinery

  An Italian manufacturer sells specialized industrial machinery to a factory in Dubai, UAE, with the agreement stating "C.F. Jebel Ali Port, Dubai." The Italian seller covers the cost of the machinery and the freight charges to get it to Jebel Ali Port. The moment the machinery is safely loaded onto the ship at the port of Genoa, Italy, the responsibility for any potential damage, theft, or additional costs during the sea journey transfers to the factory in Dubai. If the machinery arrives with dents from rough handling during the voyage, the Dubai factory would be responsible for addressing the damage and any associated repair costs, as the risk had already passed to them at the port of shipment.