Understanding FOB: A Guide to Seller & Buyer Obligations

What is FOB?

FOB,short for Free On Board,is also known as "offshore price" or "delivery on board." Typically,the exporter fulfills their delivery obligation when the goods pass the ship’s rail at the designated port of shipment.

Obligations of the Seller under FOB

Sellers obligations

(1) Deliver the goods to the buyers designated vessel at the port of shipment in the usual manner within the time or period stipulated in the contract and notify the buyer without delay.

(2) At the sellers own risk and expense,obtain any export license or other official authorization.Where applicable,carry out all customs formalities necessary for the export of the goods.

(3) Bear all costs and risks related to the goods until they have passed the ships rail at the port of shipment.

(4) Provide at the sellers own expense the usual document proving delivery of the goods to the vessel.If the buyer and seller have agreed to communicate electronically,the documents may be replaced by equivalent electronic data interchange (EDI) messages.

Obligations of the Buyer under FOB

Buyers obligations

(1) At the buyers own risk and expense,obtain any import license or other official authorization.Where applicable,carry out all customs formalities necessary for the import of the goods and for their transit through any country,and pay any duties,taxes,and other charges as well as the costs of transit.

(2) Contract for the carriage of the goods and pay the freight,and give the seller sufficient notice of the vessel name,loading point,and required delivery time.

(3) Bear all costs and risks of the goods from the time they have passed the ships rail at the port of shipment.

(4) Accept the documents provided by the seller,take delivery of the goods as stipulated in the contract,and pay the price.

Here is the information regarding "Zhongshen International Trade.

List of Parties Responsible for Costs between Buyers and Sellers under Various Trade Terms