Transfer of Risk

Transfer of Risk refers to the moment when the risk of loss or damage to goods shifts from the seller to the buyer. This is defined by the terms of delivery in the contract.

Common terms include:

• FOB (Free on Board): Risk transfers when goods are placed on board the shipping vessel. E.g., Overseas shipping.
• CIF (Cost, Insurance, and Freight): Risk transfers when the goods pass the ship’s rail. E.g., International trade.

Understanding these terms ensures clarity in responsibilities during transactions.