FOB, Free On Board (...named port
of shipment)
In Free On Board, the
seller/exporter/manufacturer clears the goods for
export and is responsible for the costs and risks of
delivering the goods past the ship's rail at the
named port of shipment.
The Free On Board term is used only
for ocean or inland waterway transport.
The "named place" in Free On Board
and all "F" terms is domestic to the seller.
Normal payment terms for Free On
Board transactions include cash in advance, open
account, and letters of credit.
The Free On Board term is commonly
used in the sale of bulk commodity cargo such as
oil, grains, and ore where passing the ship's rail
is important. However, it is also commonly used in
shipping container loads of other goods.
The key document in FOB transactions
is the "On Board Bill of Lading."
Sellers and buyers often confuse the
Free On Board term with Free Carrier. Free On Board
(FOB) does not mean loading the goods onto a truck
at the seller's place of business. Free On Board is
used only in reference to delivering the goods past
a ship's rail in ocean or inland waterway transport.
Free Carrier, on the other hand, is applicable to
all modes of transport.
Examples
FOB Free on Board "Vessel ABC"
Buenos Aires Argentina
FOB Free on Board Gdansk Poland
Incoterm Category
FOB is an "F" Incoterm where the
seller/exporter is responsible for delivering the
goods, export cleared, on board a ship, and does not
bear risk or costs afterwards.
Modes of Transport Covered
Used only for ocean or inland
waterway transport.
Seller's Responsibilities (summary)
-
Goods-Provide the goods, commercial
invoice or electronic message, and other
documentation as required by the sales contract.
-
Licenses and Customs Formalities-Obtain
at own risk and cost any export licenses and
authorizations and carry out all export
formalities and procedures.
-
Carriage and Insurance-The seller has no
obligation to the buyer to provide carriage of
goods or insurance.
-
Delivery-Deliver the goods on board the
named vessel at the named port and place and at
the time stipulated in the sales contract.
-
Risk Transfer-Assume all risks of loss or
damage to the goods until they have passed the
ship's rail on the named vessel as provided in
the sales contract.
-
Costs-Pay all costs until the goods have
passed the ship's rail on the named vessel as
well as all costs relating to export including
duties, taxes and customs formalities.
-
Notice to the Buyer-Provide sufficient
notice to the buyer that the goods have been
delivered on board the named vessel.
-
Proof of Delivery, Transport Documents-Provide
the buyer with a proof of delivery or a
transport document, or to assist the buyer in
obtaining a transport document.
-
Checking, Packing, Marking-Pay all costs
associated with checking the quality and
quantity of the goods to be in conformity with
the sales contract. Provide appropriate packing
(unless the goods are traditionally delivered
unpackaged) as required for the transport of the
goods, to the extent that the buyer has made
transport circumstances known to the seller
prior to the execution of the sales contract.
Provide marking appropriate to the packaging.
-
Other-Provide the buyer at the buyer's
request, risk and expense any and all assistance
in securing documentation originating in the
country of export or of origin required for
import and transshipment through another
country. Provide the buyer at the buyer's
request information necessary to obtain
insurance.
Buyer's Responsibilities (summary)
-
Payment-Pay for the goods as provided in
the sales contract.
-
Licenses and Customs Formalities-Obtain
at own risk and cost any import licenses and
authorizations and carry out all import
formalities.
-
Carriage and Insurance-Provide for
contract of carriage from the named port of
shipment. No obligation for insurance.
-
Taking Delivery-Take delivery of the
goods as provided in the sales contract.
-
Risk Transfer-Assume all risks of loss or
damage from the time the goods have passed the
ship's rail at the port of shipment.
-
Costs-Pay all costs for carriage and
insurance from the time the goods have passed
the ship's rail at the port of shipment in
accordance with the terms of the sales contract.
Pay all costs resulting from failure of the
named ship to arrive on time or to be able to
take the goods. Pay all costs relating to import
formalities including duties, taxes and other
charges including transshipment.
-
Notice to Seller-Give sufficient notice
to the seller of the name of the vessel, the
time or period for delivery and the place of
delivery.
-
Proof of Delivery, Transport Document-Accept
the seller's proof of delivery or transport
document.
-
Inspection(s)-Pay for the costs of
pre-shipment inspection except inspections
required by the country of export.
-
Other-Pay all costs associated with
securing documentation originating in the
country of origin or export as required for
import. Reimburse seller for seller's costs in
providing such documentation or assistance.
Source:www.geo-logistics.com |
