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The basic definition of the CIF contract is provided by Lord Atkinson in Johnson v Trylor Bros [1920] AC 144 at 145. The said annotation defined a cif contract by indicating five specific stipulations that the seller must satisfy in order to tender the completion of the contract. Even though the decision on the said case does not imply that the contract is completed by tendering the documents of the shipments to the buyer, it provides the basic implication that the seller must accomplish acts that covers the costs, insurance, and the cost of freight the goods. Nonetheless, the case have also pointed out that after the seller have procured all the necessary documents that serves a proof of the completion of his/her task as a seller in compliance to the stipulations of the contract, the goods are now at the risk of the buyer. It could thus be assumed that a contract adhering to a cif orientation is analogous to the sale of documents as opposed to the cif contract being performed by the delivery of documents. The said contract is only consummated when the latter has transpired.

In the occasion of loss of or damage to the goods during the transit it is initially essential to recognize the party entitled to take legal action to the carrier for breach of the contract of carriage. This subject is addressed in the provisions of the Carriage of Goods by Sea Act 1992 which replaced the Bills of Lading Act 1855. Generally, the 1992 statute provides this entitlement to the holder of the bill of lading, in this case, Bottom plc.

Ultimately, the buyer has the power in this kind of export contracts. In cif contracts, the buyer also reserves their right of rejection of the goods which the seller has delivered. If a seller did not succeed in making a delivery, or the seller gives rise to a imperfect delivery, the buyer may rebuff the goods, terminate the contract and get hold of “cover” goods (substitute materials), or retrieve reimbursement for the non-delivery. Similarly, the buyer’s reparation for non-delivery would be the disparity among the market price at the instance the buyer ascertained of the infringement and the contract price, in addition any permissible supplementary and consequential reparation. This furnishes the buyer an encouragement to get hold of the finest obtainable substitute goods at the most excellent existing price promptly subsequent to the buyer discovering the breach. Nonetheless, if the buyer decides on to receive substandard goods, the seller is notwithstanding legally responsible for breach of warranty. The reparation for such a breach of warranty is the disparity in worth of the goods received and the worth the goods would have had if relinquished as warranted. The buyer is nonetheless unrestricted to incidental and consequential reparation. A buyer is infrequently allowed to “specific performance” of a contract for distribution of goods. Only if goods are beyond doubt unique and unobtainable somewhere else and money reparation would not sufficiently recompense the seller, is it probable for a buyer to compel the seller to execute and deliver the contract goods.

In cases wherein the cargo is lost or damage during the freight the merchandise, the buyer has the security of insurance as provided by the terms of the contract. Nonetheless, if the insurer refuses to bear the loss of the merchandise, the buyer does not need to worry about anything since a legal dispute will thus take place between the carrier and the insurer. Although this would be a minor inconvenience for the buyer, this is the risk that he/she has to take in order to keep his/her resources safe. This particular risk could cause the delay of the operations on his part resulting to the loss of the merchandise. Nonetheless, he is assured that either the freight company or the insurer will answer for the loss or damage of his merchandise. The carrier of the merchandise is held liable for the merchandise since it is covered by international marine legislations that ensure the capacity of the ship to travel long distances without compromising its cargo onboard.