Full Form of FOB
FOB stands for Free On Board. It is a term commonly used in shipping and international trade. Below are some key points about FOB:
- Definition:
FOB indicates that the seller is responsible for the goods until they are loaded onto the vessel. Once the goods are on board, the responsibility shifts to the buyer.
Usage:
Commonly used in shipping contracts to define the point at which the ownership and risk of loss transfer from the seller to the buyer.
Key Responsibilities:
Seller’s Responsibilities:
- Arrange for transportation to the port.
- Cover costs associated with loading the goods onto the vessel.
- Ensure goods are cleared for export.
Buyer’s Responsibilities:
- Take on costs and risks once goods are loaded.
- Arrange for transportation from the port of shipment to their final destination.
Variants:
- FOB Origin: The buyer takes on responsibility once the goods leave the seller’s premises.
FOB Destination: The seller retains responsibility until the goods arrive at the buyer’s location.
Importance:
- Understanding FOB terms is crucial for both buyers and sellers to avoid disputes and clarify responsibilities in shipping transactions.
In summary, FOB (Free On Board) is a significant term in shipping and trade, marking the transition of risk and responsibility from seller to buyer.