International Commercial Term - FOB (Free on Board)

Incoterms, are internationally recognized trade rules published by the International Chamber of Commerce (ICC). They define the responsibilities of buyers (importers) and sellers (exporters) when goods are transported from one country to another. It is also know as Invoice terms.

FOB - FREE ON BOARD

In FOB term, Exporter is responsible for delivering the goods on board the vessel nominated by the buyer at the agreed port of shipment (Sea / Air). The seller / exporter bears the costs and risks until the goods are loaded on board the vessel. Once the goods are on board, the risk of loss or damage transfers to the buyer.

Example,

Exporter : Universal Swords
Importer : A USA-based company
Product : Ceremonial Swords
Order Quantity : 100 Pieces
Price Per Piece : $ 100
Total Order Value : $ 10,000
Invoice Term : FOB - New Delhi (Port Code : INDEL4)

Under this arrangement, exporter is responsible for preparing and packing, domestic transportation and insurance, custom clearance formalities within India upto New Delhi Port. Once the goods have been delivered to the buyer's nominated carrier, the risk generally transfers to the importer. The importer is then responsible for arranging the international transportation and Insurance to the USA, along with import customs clearance, applicable duties, and onward delivery.

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