Free on Board or FOB is an international commercial shipment term used to indicate whether the seller of the buyer is liable for goods that get damaged or destroyed during transit. FOB origin or FOB shipping point refers to the term that the buyer is at risk and can claim ownership of goods once they are shipped by the seller.
The sale is completed at the seller’s dock
The buyer is responsible for the costs and liability of the freight during transport
Responsibility transfers once the goods are aboard the transport
These terms may be added to or included in the freight invoice, bill of lading, or other shipping documents. They are as follows:
The seller or shipper pays the cost of shipping
The buyer or receiver of goods assumes the responsibility of goods at the point of origin
The buyer pays for freight and shipping costs
The buyer assumes full responsibility for the cargo until it reaches the point of destination or drop off
The seller does not pay the cost of shipping
The seller adds the freight costs to the invoice sent to the buyer
The buyer takes ownership of the goods at the point of origin
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