Difference between the Contract of CIF and Contract of FOB?

Contract of CIF refers Cost, Insurance and Freight Contract. It is a type of contract for the sale of goods by which the seller agrees not only to supply the good but also to make a contract of carriage with a sea carrier, under which the goods will be delivered at the destination and a contract of insurance with an insurer to cover them while they are in transit. The seller performs his contract by delivering the relevant document to the buyer i.e an invoice specifying goods and their price, a bill of landing evidencing the contract of carriage, a policy of insurance etc. briefly thus, contract of CIF is the contract in which a seller of goods does not only contract with the buyer for sale of goods but also enters into contract with the carrier for shipment of goods and insures the goods sold during sea transit.

FOB contract refers Free on Board Contract. It is the type of contract for the sale of goods in which the seller’s duty is fulfilled by placing the goods on board a ship. Unlike the CIF, the seller does not enter into contract of carriage nor does he insure the goods sold.