Full Form of FOB:
Free On Board
FOB Full Form is Free On Board. This is an American term, which is also used in International Commercial Law. It indicates the period when the seller gives away the ownership of goods to the buyer. According to the International Chamber of Commerce’s (Icc) Incoterms 2010, FOB term is used only in sea freight that has no containers.
It also defines the transfer of ownership. This means, the owners of goods are responsible for loss or damage during the transport. Contracts that involve International shipping have several trade terms. One among them is Incoterms. Most manufacturers have FOB policy to understand when the customer receives the goods it will be in perfect condition.
This term simply implies the point of time when a good is dispatched via shipping by the seller to the destination provided by the buyer. This is often referred to as freight forward, collect freight, or freight collect of goods. The system of FOB implies that a buyer does not have to bear any cost to the point when a good is placed on board through airlines or shipping. A buyer has to seller has to bear all expenses regarding the cost of the price and the shipping charges.
The seller’s obligations are fulfilled when he dispatches the good on the board. But after receiving the goods, the buyer has to pay for any additional cost for insurance of goods, unloading, and transportation to the specific destination etc. After the dispatch of the goods, the buyer is solely responsible for any loss or damage of the products. An FOB contract usually consists of the personal information of the buyer including his name, place of delivery, and expected time of delivery. FOB is immensely related to the ownership transfer of goods. It denotes the point of the transfer of ownership from the seller to the buyer. Most acceptable standards and regulations of FOB is determined by International Chamber of Commerce.
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