Commonly Used Terms
Free On Board (FOB)
Free On Board means that the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel, and the buyer bears all costs from that moment onwards.
The term 'free' refers to the supplier's obligation to deliver goods to a specific location, later to be transferred to a carrier. It also means the supplier is "free" of responsibility. 'Onboard' simply means that the goods are on the ship.
As such, FOB shipping means that the supplier retains ownership and responsibility for the goods until they are loaded 'onboard' a shipping vessel. Once on the ship, all liability transfers to the buyer.
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