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CHAPTER 8

Contractor, prime:

In a large project contract involving supply of materials, machinery,

equipment, construction works etc., a buyer may prefer to appoint

a prime contractor who may sub-contract parts of supplies, or

fabrication of machinery to other sub-contractors, with overall

responsibility for project execution remaining with the prime

contractor. See also Contractor.

Cost estimate:

A cost estimate prepared by the buyer for goods, works or services

which provides a benchmark or a basis for evaluation and/or

negotiation when tenders/offers are received from tenderers. It also

serves as an instrument of project planning and budgeting.

Cost and freight

(CFR):

Incoterm ‘Cost and Freight’ means that the supplier must pay the

costs and freight necessary to bring the goods to the named port of

destination but the risk of loss or damage to the goods, as well as

any additional costs due to events occurring after the time the goods

have been delivered on board the vessel, is transferred from the

supplier to the buyer when the goods pass the ship’s rail in the port

of shipment. The CFR term requires the supplier to clear the goods

for export. This term can only be used for sea and inland waterway

transport. When the ship’s rail serves no practical purpose, such

as in the case of roll-on/roll-off or container traffic, the CPT term is

more appropriate to use. See also Incoterms.

Cost, insurance and

freight:

Incoterm ‘Cost, Insurance and Freight’ means that the supplier has

the same obligations as under CFR but with the addition that he

has to procure marine insurance against the buyer’s risk of loss or

damage to the goods during the carriage. The supplier contracts

for insurance and pays the insurance premium. The buyer should

note that under the CIF term the supplier is only required to obtain

insurance on minimum coverage. The CIF term requires the supplier

to clear the goods for export. This term can only be used for sea and

inland waterway transport. When the ship’s rail serves no practical

purposes such as in the case of roll-on/roll-off or container traffic,

the CIP term is more appropriate to use. See also Incoterms.

Counter offer:

The acceptance of a tenderer’s offer by the buyer but with a

modification in one of more terms and conditions of offer. In legal

terms it amounts to a new proposal to the tenderer which will be

construed as a contract only if he accepts the revised proposal

of the buyer without any qualifications. See also Acceptance of

tender/offer.

CPT:

See Carriage Paid To.

Customs clearance:

See Clearance of goods.

Customs duties:

Taxes levied upon goods on entry into (import duties) or exit from

(export duties) the country. See also Customs tariff and Import duties.

GLOSSARY