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The phrase "Free on Board" (FOB) in commerce denotes the passage of ownership and risk of loss of the goods from the supplier to the buyer. Identifying the boundary between the seller's and the buyer's obligations regarding the items is frequently done in international commerce transactions.
Frequently, FOB is followed by a place, which designates the spot where the items will be placed onto the transport vehicle. When a shipment is described as FOB Port of Los Angeles, for instance, the seller is in charge of the goods up until the point at which they are put on the transport vehicle at the Port of Los Angeles. The buyer is then responsible for the products after that.
FOB can be utilized with a variety of modes of transportation, including land, sea, and air. The Incoterms (International Commercial Terms) standardizes the meanings and guidelines for the usage of FOB and other trade terminology in international trade.
In international trade, FOB is crucial because it establishes the expense and risk of shipping products from the seller to the buyer. To prevent disagreements or misunderstandings, it is crucial for both parties to have a full grasp of the FOB terms in the contract.
