Colorado Code
Part 3 - General Obligation and Construction of Contract
§ 4-2-320. c.i.f. and C. & F. Terms

Source: L. 65: p. 1314, § 1. C.R.S. 1963: § 155-2-320.
Prior Uniform Statutory Provision: None.
Purposes: To make it clear that:

Unless the shipment has been sent "freight collect" the buyer is entitled to receive documentary evidence that he is not obligated to pay the freight; the seller is therefore required to obtain a receipt "showing that the freight has been paid or provided for." The usual notation in the appropriate space on the bill of lading that the freight has been prepaid is a sufficient receipt, as at common law. The phrase "provided for" is intended to cover the frequent situation in which the carrier extends credit to a shipper for the freight on successive shipments and receives periodical payments of the accrued freight charges from him.
Insurance secured in compliance with a C.I.F. term must cover the entire transportation of the goods to the named destination.
The contract contemplates that before the goods arrive at their destination they may be sold again and again on C.I.F. terms and that the original policy of insurance and bill of lading will run with the interest in the goods by being transferred to each successive buyer. A buyer who becomes the seller in such an intermediate contract for sale does not thereby, if his sub-buyer knows the circumstances, undertake to insure the goods again at an increased price fixed in the new contract or to cover the increase in price by additional insurance, and his buyer may not reject the documents on the ground that the original policy does not cover such higher price. If such a sub-buyer desires additional insurance he must procure it for himself.
Where the seller exercises an option to ship "freight collect" and to credit the buyer with the freight against the C.I.F. price, the insurance need not cover the freight since the freight is not at the buyer's risk. On the other hand, where the seller prepays the freight upon shipping under a bill of lading requiring prepayment and providing that the freight shall be deemed earned and shall be retained by the carrier "ship and/or cargo lost or not lost," or using words of similar import, he must procure insurance that will cover the freight, because notwithstanding that the goods are lost in transit the buyer is bound to pay the freight as part of the C.I.F. price and will be unable to recover it back from the carrier.
The seller's failure to tender a proper insurance document is waived if the buyer refuses to make payment on other and untenable grounds at a time when proper insurance could have been obtained and tendered by the seller if timely objection had been made. Even a failure to insure on shipment may be cured by seasonable tender of a policy retroactive in effect; e.g., one insuring the goods "lost or not lost." The provisions of this Article on cure of improper tender and on waiver of buyer's objections by silence are applicable to insurance tenders under a C.I.F. term. Where there is no waiver by the buyer as described above, however, the fact that the goods arrive safely does not cure the seller's breach of his obligations to insure them and tender to the buyer a proper insurance document.
Cross References:
Point 4: Section 4-2-323.
Point 6: Section 4-2-509(1)(a).
Point 9: Sections 4-2-508 and 4-2-605(1)(a).
Point 12: Sections 4-2-321(3), 4-2-512 and 4-2-513(3) and Article 5.
Definitional Cross References:
"Bill of lading". Section 4-1-201.
"Buyer". Section 4-2-103.
"Contract". Section 4-1-201.
"Goods". Section 4-2-105.
"Rights". Section 4-1-201.
"Seller". Section 4-2-103.
"Term". Section 4-1-201.