Simple English definitions for legal terms
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Free on board (FOB) is a term used in the sale of goods. It means that the seller will put the goods on a ship at a specific place without charging the buyer for packing, shipping, or other expenses. At this point, the buyer becomes the owner of the goods and is responsible for any damage or loss that may occur during shipping. The seller must ship the goods in the manner provided in the agreement, and the buyer must give any necessary instructions for delivery. The buyer must also pay for the goods when the required documents are presented.
Definition: Free on board, or FOB, is a term used in the sale of goods. It means that the seller will place the purchased goods on board a vessel for shipment at a designated location without any cost to the buyer for packing, postage, or cartage. At this point, the legal title, rights, and risk of loss pass from the seller to the buyer. The designated location is usually a transportation depot.
For example, if a buyer in New York purchases goods from a seller in China with FOB terms, the seller will be responsible for shipping the goods to a designated location in China and loading them onto a vessel. Once the goods are on board, the legal title and risk of loss pass to the buyer, who is responsible for any further transportation costs and risks.
The Uniform Commercial Code (UCC) provides specific terms for FOB. According to UCC § 2-319, unless otherwise agreed:
Overall, FOB is a delivery term that specifies the responsibilities of the seller and buyer in the shipment of goods. It is important for both parties to understand the terms and agree upon them before making a purchase or sale.