Nautical Term: FOB
Definition of FOB
Free on Board (FOB) is a common term used in maritime law and international trade. With an FOB contract, the ownership and risk of the goods transfer from the seller to the buyer when the goods pass over the ship’s rail and are loaded on board. The seller is responsible for loading the goods onto the ship, which is usually arranged and paid for by the buyer.
For example, The seller agreed to sell 100 tons of steel to the buyer under FOB terms. The buyer arranged for the ship and paid for the transportation costs. When the steel was loaded onto the ship and passed over the rail, the ownership and risk of the goods transferred to the buyer.
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