Cost and freight (CFR) is a legal term used in foreign trade contracts.

In a contract specifying that a

sale is cost and freight, the seller is required to arrange for the carriage of goods by sea to a port of
destination and provide the buyer with the documents necessary to obtain them from the carrier.
With a cost and freight sale, the seller is not responsible for procuring marine insurance against the
risk of loss or damage to the cargo during transit. Cost and freight is a term used strictly for cargo
transported by sea or inland waterways.

The term CFR means that the seller has more responsibility; they will pay for and arrange
transportation. This can be contrasted with a seller under an FOB shipping transaction; where the
seller is merely responsible for delivery of the goods to the port of origin; they will then be
transported. In relation to liability and ultimate responsibility, the purchaser will take on the
responsibility when the ship has docked in the port of destination. The further costs that will include
further transportation and the unloading of the vessel will be beared by the buyer.

Seller’s Obligations

o Goods, commercial invoice and documentation

o Export packaging and marking

o Export licenses and customs formalities

o Pre-carriage and delivery

o Loading charges

o Delivery at named port of destination

o Proof of delivery

o Cost of pre-shipment inspection

Buyer’s Obligations

o Payment for goods as specified in sales contract

o Risk starting with onboard delivery

o Discharge and onward carriage

o Import formalities and duties

o Cost of pre-shipment inspection (for import clearance)