Freight on Board (FOB)

Definition

Freight on Board (FOB) is a term used to indicate that when a factory loads the freight on board the commercial delivery truck, they are no longer responsible for any damages. Responsibility transfers to the trucking company at that point.

Purpose

The purpose of FOB terms is to clearly define the point at which responsibility and liability for the goods transfer from the seller to the buyer, minimizing disputes over damages during transit.

Examples of Use

• FOB Origin: The buyer assumes responsibility as soon as the goods are loaded onto the shipping truck at the seller's location.
• FOB Destination: The seller is responsible for the goods until they reach the buyer's location.

Related Terms

• CIF (Cost, Insurance, and Freight): A term indicating that the seller is responsible for the cost, insurance, and freight until the goods reach the destination port.
• EXW (Ex Works): A term where the seller makes the goods available at their premises, and the buyer is responsible for all transportation costs and risks.
• DAP (Delivered at Place): The seller bears all risks and costs of delivering the goods to the buyer's specified location.

Notes

FOB terms should be specified in contracts to avoid misunderstandings about when the risk and cost responsibilities shift from the seller to the buyer.