| free on board adj. & adv. Abbr. FOB Without charge to the purchaser for delivery on board or into a carrier at a specified point or location. |
Free On Board - FOB
A trade term requiring the seller to deliver goods on board a vessel designated by the buyer. The seller fulfills his obligations to deliver when the goods have passed over the ship's rail.
When used in trade terms, the word "free" means the seller has an obligation to deliver goods to a named place for transfer to a carrier.
Investopedia Commentary
Contracts involving international transportation often contain abbreviated trade terms that describe matters such as the time and place of delivery and payment, when the risk of loss shifts from the seller to the buyer, as well as who pays the costs of freight and insurance.
The most commonly known trade terms are Incoterms, which are published by the International Chamber of Commerce. These are often identical in form to domestic terms, such as the American Uniform Commercial Code, but have different meanings. As a result, parties to a contract must expressly indicate the governing law of their terms.
It's important to realize that because this is a legal term, its exact definition is much more complicated and differs by country. It is suggested that you contact an international trade lawyer before using any trade term.
Related Links
What Is The World Trade Organization?
What Is International Trade?
See also: Cost and Freight - CFR, Cost, Insurance and Freight - CIF, Delivered Ex Ship - DES, Ex Works - EXW, Free Alongside - FAS, Free Carrier - FCA, Incoterms
Also spelled: FOB
