Introduction
IKHLAS MARINE CARGO TAKAFUL provides
a ready check as to the sellers and buyers respective
responsibilities depending upon the terms of sale
on which goods are sold.
TERMS OF SALE
EX WORKS
“Ex Works” means that the seller’s
only responsibility is to make the goods available
at his premises (i.e. works or factory). In particular
he is not responsible for loading the goods in the
vehicle provided by the buyer, unless otherwise agreed.
The buyer bears the full cost and risk involved in
bringing the goods from there to the desired destination.
This item thus represents the minimum obligation
for the seller.
FREE CARRIER… (NAMED PORT)
This
terms has been designed to meet the requirement of
modern transport, particularly such ‘multimodal’ transport
as container or ‘roll on –roll off’ traffic
by trailers and ferries. It is based on the same
main principle as FOB except that the seller fulfills
his obligations when he delivers the goods into the
custody of the carrier at the named point. If no
precise point can be mentioned at the time of the
contract of sale, the parties should refer to the
place or range where the carrier should take the
goods into his charge. The risk of loss of or damage
to the goods is transferred from the seller to buyer
at that time and not at the ship’s rail. “Carrier” means
any person by whom or in whose name a contract of
carriage by road, rail, air, sea or a combination
of modes has been made. When a seller has to furnish
a bill of lading, waybill or carrier’s receipt,
he dully fulfills this obligation by presenting such
a document issued by a person so defined.
FOR/FOT
FOR and FOT means “Free on Rail” and “Free
on Truck”. These terms are synonymous since
the word “Truck” related to the railway
wagons. They should only be used when the goods are
to be carried by rail.
FOB AIRPORT
FOB Airport is based on the same main principles
as the ordinary FOB terms. The seller fulfills his
obligations by delivering the goods to the air carrier
at the airport of departure. The risk of loss of
or damage to the goods is transferred from the seller
to the buyer when the goods have been delivered.
FAS
FAS means “Free Alongside Ship”. Under
this terms the seller’s obligations are fulfilled
when the goods have been placed alongside the ship
on their quay or in lighters. This means that the
buyer has to bear all costs and risks of loss of
or damage to the goods from that moment. It should
be noted that, unlike FOB, the present term requires
the buyer to clear the goods for export.
FOB
FOB means “Free on Board”. The goods
are placed on board a ship by the seller at a port
of shipment named in the sales contract. The risk
of loss of or damage to the goods is transferred
from the seller to the buyer when the goods pass
the ship’s rail.
C&F
C&F means “Cost & Freight”.
The seller must pay the costs and freight necessary
to bring the goods to the named destination, but
the risk of loss of or damage to the goods, as well
as of any cost increases, is transferred from the
seller to the buyer when the goods pass the ship’s
rail in the port of shipment.
CIF
CIF means “Cost, Insurance and Freight”.
This terms is basically the same as C&F but with
the addition that the seller has to procure marine
insurance against the risk of loss of or damage to
the goods during the carriage. The seller contracts
with the Insurer and pays the insurance premium.
FREIGHT )
CARRIAGE ) PAID TO
Like C&F “Freight or Carriage paid to ….” means
that the seller pays the freight for carriage of
the goods to the named destination. However, the
risk of loss of or damage to the goods, as well as
of any cost increases, is transferred from the seller
to the buyer when the goods have been delivered into
the custody of the first carrier and not at the ship’s
rail. It can be used for all modes of transport including
multimodal operations and container or roll on-roll
off traffic by trailers and ferries. When the seller
has to furnish a bill of lading, waybill or carrier’s
receipt, he duly fulfills this obligation by presenting
such a document issued by the person with whom he
has contracted for carriage to the name destination.
FREIGHT ) AND INSURANCE
CARRIAGE ) PAID TO
This term is the same as “Freight or Carriage
paid to…..” but with the addition that
the seller has to procure transport insurance against
the risk of loss of or damage to the goods during
the carriage. The seller contracts with the insurer
and pays the insurance premium.
EX SHIP
“Ex Ship” means
that the seller shall make the goods available to
the buyer on board the
ship at the destination named in the sales of contract.
The seller has to bear the full cost and risk involved
in bringing the goods there.
EX QUAY
“Ex Quay” means
that the seller makes the goods available to the
buyer on the quay (wharf)
at the destination named in the sales contract. The
seller has to bear the full cost and risk involved
in bringing the goods there.
There are two “Ex Quay” contracts in
use, namely “Ex Quay (duty paid)” and “Ex
Quay (duties on buyer’s account)” in
which the liability to clear the goods for import
are to be met by the buyer instead of by the seller.
Parties are recommended always to use the full description
of these terms, namely “Ex Quay (duty paid)” or “Ex
Quay (duties on buyer’s account)”, or
else there may be uncertainty as to who is to be
responsible for the liability to clear the goods
for import.
DELIVERED AT FRONTIER
“Delivered at Frontier” means that the
seller’s obligations are fulfilled when the
goods have arrived at the frontier- but before “the
customs border” of the country named in the
sales of contract.
The term is primarily intended to be used when goods
are to be carried by rails or road but it may be
used irrespective of the mode of transport.
DELIVERED DUTY PAID
While the term “Ex Works” signifies
the seller’s minimum obligation the term” Delivered
Duty Paid”, when followed by words naming the
buyer’s premises, denote the other extreme-
the seller’s maximum obligation. The term “Delivered
Duty Paid” may be used irrespective of the
mode of transport.
If parties wish that the seller should clear the
goods for import but that some of the costs payable
upon the import of the goods should be excluded-
such as value added tax (VAT) and/or other similar
taxes- this should be made clear by adding words
to this effect (e.g. “ exclusive of VAT and/or
taxes”)
3.0 TYPE OF MARINE CARGO COVER
The types of cover available are usually referred
to as follows:-
3.1 T.L.O. (TOTAL LOSS ONLY)
Cover total loss of the insured interest
caused by the perils of the seas. Due to limited
cover provided,
request for such cover nowadays are seldom.
3.2 F.P.A (FRE OF PARTICULAR AVERAGE)- AS PER INSTITUTE
CARGO CLAUSES
An F.P.A. Marine Insurance policy covers the perisl
of the seas only resulting in:-
• Total loss (including Constructive Total Loss)
of the whole interest insured.
• Total loss of any package or packages occurring
during loading, transshipment or discharge.
• Partial loss caused if the carrying vessel is stranded,
sunk or burnt; and if attributed to fire, explosion,
collision or contact of carrying vessel with any
external substances (ice included) other than water.
The policy also covers General Average, Sue and
Labour Charges, Particular Charges and Salvage Charges.
3.3 W.A. OR W.P.A (WITH AVERAGE OR WITH PARTICULAR
AVERAGE)
- AS PER INSTITUTE CARGO CLAUSES (W.A)
The main difference between F.P.A and W.A is that the former excludes any partial
loss (except in certain circumstances) whereas the latter provides partial
loss cover. The W.A policy covers all the risks insured under the F.P.A. policy,
and in addition covers Partial Loss to cargo caused by the perils of the sea,
where the most common peril is seawater damage.
3.4 W.A PLUS T.P.N.D (W.A. WITH THEFT, PILFERAGE AND NON DELIVERY)
In addition to the covers provided under the basic
W.A policy, the risks of theft, pilferage and non-delivery
is also included. It must be borne in mind that any
claim of theft or pilferages, notices must be given
to the underwriters or their appointed agents within
ten days of expiry of the risks.
3.5 W.A, T.N.P.D PLUS OTHER EXTRANEOUS RISKS E.G.
HOOKS, OIL, MUD, SWEAT, ACID, FRESH OR RAINWATER,
CONTACT WITH OTHER CARGO ETC
In addition to the risks provided under 4 above,
other extraneous risks like hooks, oil, mud, sweat,
acid fresh or rainwater, contact with other cargoes,
etc can be covered as required with payment of additional
premium.
3.6 ALL RISKS – AS PER INSTITUTE CARGO
CLAUSES
The All Risks Policy covers against all risks of loss of or damage to the subject
matter; excluding loss, damage or expense proximately caused by delay or inherent
vice or nature of the subject matter insured.
The policy also covers General
Average, Sue and Labour Charges, Particular Charges and Salvage Charges
The
cover provided under the Institute Cargo Clauses
irrespective of whether it is F.P.A.., W.A. or All
Risks, excludes the risks of War, Strikes and Civil
Commotion. So in order for such risks to be included,
the basic policy shall have to be extended
The War Risks ( as per Institute War Clauses) cover
against the risks of capture, seizure, arrest,
restraint or detainment; and the consequences thereof
or of any attempt thereat; and the consequence
of hostilities or war like operations, whether
there be a declaration of war or not; civil war;
revolution; rebellion; insurrection or civil strife
arising therefrom; piracy; mines; torpedoes; bombs
or other engines of war (but excluding loss or
damage proximately caused by delay, inherent vice
or loss of market or any claim for expenses arising
from delay).
The coverage of war risk is confined
to the period while the goods are on an overseas
vessel but there
ere two exceptions as follows:-
a. The risk of mines and derelict torpedoes, floating
or submerged are covered while the goods are in a
craft being used for loading to and from the overseas
vessel at port of loading, transhipment and discharge.
b. War risks are covered for 15 days during transhipment
at an intermediate port even when the goods are stored
onshore
The Strikes, Riot and Civil Commotion risks
( as per Institute Strikes, Riot and Civil Commotion
Clauses)
cover any loss of or damage caused by strikers, locked-out
workmen or persons taking part in labour disturbances,
riot or civil commotions; and person(s) acting maliciously
(but excluding any loss or damage proximately caused
by delay inherent vice or nature of the property
insured; the absence, shortage or withholding of
labour of any description whatsoever during any strike,
lockout, labour disturbance, riot or civil commotion;
any claim for expenses arising from delay; and loss
or damage caused by the war risks).
4. REVISION OF INSTITUTE CARGO CLAUSES
Every effort has been made to achieve a more direct
approach by simplifying or replacing wordings wherever
possible which, while having stood the test of time,
have been criticized as archaic and antiquated and
unintelligible to some to some assureds. With this
criticism in mind it will be seen that the new Institute
Cargo Clauses (A), (B) and (C) dated 1.1.1982, are
capable of standing on their capable of standing
on their own and are for use only with the New Marine
Policy Forms which act merely as vehicles for the
clauses. They present an easily understandable cover
which no longer involves cross-reference to the policy.
The covers provided under the respective clauses
are as follows:-
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4.1 INSTITUTE
CARGO CLAUSES (A)
Risks Covered
1. All Risks of loss of or damage to the subject
matter insured except as excluded below.
2. General Average and Salvage Charges except from
any cause which are excluded below.
3. Indemnify against such proportion of liability
under the contract of affreightment “Both to
Blame Collision Clause” as in respect of a
loss recoverable hereunder.
Exclusion
1. (a) loss damage or expenses attributable to willful misconduct of the assured.
(b) ordinary leakage, ordinary loss in weight or
volume, or ordinary wear and tear of the subject
matter insured.
(c) loss damage or expense caused by inherent insufficiency
or unsuitability of packing or preparation of the
subject matter insured
(d) loss damage or expense caused by inherent vice
or nature or nature of the subject matter.
(e) loss damage or expense arising proximately caused
by delay, even though delay be caused by a risk insured
against
(f) loss damage or expense arising from insolvency
or financial default of the owners managers, charterers
or operators of the vessel.
(g) loss damage or expense arising from the use
of any weapon of war employing atomic or nuclear
fission and/or fusion or other like reaction or radioactive
force or matter.
2. Unseaworthiness of vessel or craft; and/or unfitness
of vessel craft; and/or unfitness of vessel craft
conveyance container or lift van for the safe carriage
of the subject insured, where the assured or their
servants are privy to such unseaworthiness or unfitness
at the time of the subject matter is loaded therein.
The Underwriters waive any breach of the implied
warranty of seaworthiness of the ship and fitness
of the ship to carry the subject matter insured to
destination unless the assured or their servant are
privy to such unseaworthiness or unfitness.
3. (a) War, civil war, revolution, rebellion, insurrection
or civil strife arising therefrom, or any hostile
act by or against a belligerent power.
(b) capture, seizure, arrest, restraint or detainment
(piracy excepted) and the consequences thereof or
any attempt thereat.
(c) derelict mines, torpedoes, bombs or other derelict
weapon of war.
4. (a) caused by strikers, lock-out workmen, or persons taking part in labour
disturbances, riot or civil commotions.
(b) resulting from strikes, lock-outs, labour disturbances,
riot or civil commotions.
(c) caused by any terrorist or any person acting
from a political motive.
4.2 INSTITUTE
CARGO CLAUSES (B)
Risks covered- except as excluded below.
1. (a) Loss of or damage to the subject matter insured
reasonably attributable to fire or explosion; vessel
or craft being stranded grounded sunk or capsized
; overturning or derailment of land conveyance; collision
or contact of vessel or conveyance with any external
object other than water; discharge of cargo at port
of distress; and earthquake volcanic eruption or
lightning.
(b) Loss of or damage to the subject matter insured
caused by General Average sacrifice; jettison or
washing overboard; and entry of sea lake or river
water into vessel craft hold conveyance container
lift van or place of storage.
(c) Total loss of any package lost overboard or
dropped whilst loading on to, or unloading form vessel
or craft.
2. General Average and Salvage Charges, adjusted
or determined according to the contract of affreightment
and/or the governing law and practice incurred to
avoid or in connection with the avoidance of loss
from any cause except those excluded.
3. Indemnity against such proportion of liability under the contract of affreightment “Both
to Blame Collision” Clause as in respect of a loss recoverable hereunder.
Exclusions
1. (a) loss damage or expense attributable to willful
misconduct of the assured.
(b) ordinary leakage, ordinary loss in weight or
volume, or wear and tear of the subject matter insured.
(c) loss damage or expense caused by inherent insufficiency
or unsuitability of packing or preparation of the
subject matter insured
(d) loss damage or expense caused by inherent vice or nature of the subject
matter insured.
(e) loss damage or expense proximately caused by
delay, even though the delay be caused by a risk
insured against.
(f) loss damage or expense arising from insolvency
or financial default of the owners managers charterers
or operators or the vessel.
(g) deliberate damage to or deliberate destruction
of the subject matter insured or any part thereof
by the wrongful act of any person or persons.
(h) loss damage or expense arising from the use
of any weapon of war employing atomic or nuclear
fission and/or fusion or other like reaction or radioactive
force or matter.
2. Unseaworthines vessel or craft; and unfitness
of vessel craft conveyance container or liftvan for
the safe carriage of the subject matter insured,
where the assured or their servant are privy to such
unseaworthiness or unfitness, at the time the subject
matter insured is loaded therein.
The Underwriters waive any breach of the implied
warranty of seaworthiness of the ship and fitness
of the ship to carry the subject matter insured to
destination, unless the assured or their servants
are privy to such unseaworthiness or unfitness.
3 (a) War, civil war, revolution, rebellion, insurrection
or civil strife arising therefrom, or any hostile
act by or against a belligerent power.
(b) capture, seizure, arrest, restraint or detainment
(piracy excepted) and the consequences thereof or
any attempt thereat.
(c) derelict mines, torpedoes, bombs or other derelict
weapon of war.
4. (a) caused by strikers, lock-out workmen, or
persons taking part in labour disturbances, riot
or civil commotions.
(b) resulting from strikes, lock-outs, labour disturbances,
riot or civil commotions.
(c) caused by any terrorist or any person acting
from a political motive.
4.3 INSTITUTE
CARGO CLAUSE (C)
Risks Covered- except as excluded below
1. Loss of or damage to the subject matter insured
reasonably attributable to fire or explosion; vessel
or craft being stranded grounded sunk or capsized;
overturning or derailment of land conveyance; collision
or contract of vessel craft or conveyance with any
external object other than water; and discharge or
cargo at port of distress.
2. General Average and Salvage Charges, adjusted
or determined according to the contract of the
affreightment and/or the governing law and practice,
incurred to avoid or in connection with the avoidance
of loss from any cause except those excluded.
3. Indemnity against such proportion of liability
under the contract of affreightment “Both to
Blame Colliosn” Clause as in respect of a loss
recoverable hereunder.
Exclusions
1. (a) loss damage or expense attributable to willful
misconduct of the assured.
(b) ordinary leakage, ordinary loss in weight or
volume, or wear and tear of the subject matter insured.
(c) loss damage or expense caused by inherent insufficiency
or unsuitability of packing or preparation of the
subject matter insured
(d) loss damage or expense caused by inherent vice
or nature of the subject matter insured.
(e) loss damage or expense proximately caused by
delay, even though the delay be caused by a risk
insured against.
(f) loss damage or expense arising from insolvency
or financial default of the owners managers charterers
or operators or the vessel.
(g) deliberate damage to or deliberate destruction
of the subject matter insured or any part thereof
by the wrongful act of any person or persons.
(h) loss damage or expense arising from the use
of any weapon of war employing atomic or nuclear
fission and/or fusion or other like reaction or radioactive
force or matter.
2. Unseaworthines vessel or craft; and unfitness
of vessel craft conveyance container or liftvan for
the safe carriage of the subject matter insured,
where the assured or their servant are privy to such
unseaworthiness or unfitness, at the time the subject
matter insured is loaded therein.
The Underwriters waive any breach of the implied
warranty of seaworthiness of the ship and fitness
of the ship to carry the subject matter insured to
destination, unless the assured or their servants
are privy to such unseaworthiness or unfitness.
3 (a) War, civil war, revolution, rebellion, insurrection
or civil strife arising therefrom,
or any hostile act by or against a belligerent power.
(b) capture, seizure, arrest, restraint or detainment
(piracy excepted) and the consequences thereof or
any attempt thereat.
(c) derelict mines, torpedoes, bombs or other derelict
weapon of war.
4. (a) caused by strikers, lock-out workmen, or
persons taking part in labour disturbances, riot
or civil commotions.
(b) resulting from strikes, lock-outs, labour disturbances,
riot or civil commotions.
(c) caused by any terrorist or any person acting
from a political motive.
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