WHAT IS FREE ON BOARD (FOB)?

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When you sell goods, it’s important to know whether your buyer will be taking responsibility for the product as well. This is determined by the designation Free on Board, or FOB in a shipping contract.

The term is used to indicate who will take responsibility for paying freight charges, at what point in time the title of an item becomes transferred from seller to buyer, and a set physical location.

 

MODIFIERS

Modifiers are crucial to understanding how the payment for transportation charges will be made. There is more than one type of modifier.

 

FOB ORIGIN – THE BUYER ASSUMES RESPONSIBILITY

 

FOB DESTINATION – THE SELLER ASSUMES RESPONSIBILITY

 

PAYMENT TERM VARIATIONS – FOB ORIGIN

 

PAYMENT TERM VARIATIONS – FOB DESTINATION

 

SHIPPING DEFINITIONS

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