Free on Board

Posted in Operations and Supply Chain Terms, Total Reads: 1501

Definition: Free on Board

Free on Board (FOB), also referred as Freight on Board, refers to the rights and obligations of parties involved in shipping or transferring goods on a vessel. It usually deals with the following issues:

  • Which  party – buyer or seller – pays for the shipment and loading
  • At what point the goods are considered transferred from the buyer to the seller
  • At what point  the transfer of risk takes place
  • When and how the payment is made
  • Liability for damaged goods during transit
  • Licenses, authorizations, insurance

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