Quick Definition

Free on Board (FOB) is a term used in international trade to indicate whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping.

Examples

• 1A U.S. company buys ceramics from Italy with terms FOB Milan, meaning the U.S. company pays for transportation from Milan and assumes risk once the goods leave the seller's premises.
• 2An Indian textile manufacturer ships goods to Canada under FOB Mumbai terms, making the Canadian buyer responsible for the sea freight and insurance costs.
• 3A Brazilian coffee exporter agrees to FOB Santos terms with a European buyer, transferring all risks to the buyer once the coffee is loaded onto the ship at Santos port.

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