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Incoterm CFR

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Incoterm CFR is a type of usual practice in international trade, whereby the seller is responsible for the transport of the merchandise but doesn't assume insurance costs.

The incoterm CFR is a widespread commercial concept in the field of international sale of goods. The International Chamber of Commerce has established this practice as one of the most important major incoterms.

It's a type of agreement that in trade between different economic agents belonging to different countries of the world. In it, the expenses related to the transaction of sale are distributed between seller (in charge of transport and relative expenses) and the buyer (responsible for the insurance to be contracted for the shipment).

In this way, this incoterm raises the distribution of risk between both parties in a trade agreement.

The acronym of this trade name (in English: cost and freight) responds to the above explained. The seller won't be obliged in this mode to bear the cost of shipping insurance.

Basic implications of a CFR type trade agreement

In these types of agreements between agents from different countries there are a number of features to highlight:

- The seller ensures the arrival of the merchandise, carrying the expenses derived from the logistics (preparation and shipping, as well as deposit at the port of departure)
- The corresponding contracting of an insurance policy that covers the risks for the merchandise is the responsibility of the buyer.
- The different tariffs referring to customs and tariffs in port of departure are attributed to the selling agent, while those of destination port are directed to the buyer, as is transport in the country of destination if necessary.
- This type of commerce is carried out in a maritime and river environment.

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