FOB stands for Free on Board… (named port of shipment), which means delivery on board the ship at the designated port of shipment (… designated port of shipment). It means that the seller has fulfilled its obligation to deliver the goods after loading the goods on board the ship at the designated port of shipment, and all subsequent costs and risks shall be borne by the buyer. This means that after the goods are loaded on board, the risk shifts from the seller to the buyer, and the buyer bears all risks of loss or damage to the goods from that point on.
FOB terms apply to water transport.
Basic obligations of the buyer and the seller
(1) Seller’s obligations
① Load the goods on the vessel designated by the buyer at the designated port of shipment within the port of shipment and shipping period specified in the contract, and notify the buyer in a timely manner.
② Bear all risks and costs before the goods are delivered to the ship.
③ Responsible for handling export customs clearance procedures, providing export licenses or other official approvals, and handling all customs clearance procedures for goods, and paying export tariffs and other related fees.
④ Responsible for providing commercial invoices and any other documents proving that the goods comply with the provisions of the contract, or electronic records or procedural certificates with equivalent functions. (2) Buyer’s Obligations
① Responsible for chartering a ship or booking a container, paying freight, and notifying the seller of the ship’s name, loading place and loading time in accordance with regulations. ② Bear all costs, risks and responsibilities after the goods cross the ship’s rail at the port of shipment. ③ Handle insurance procedures and pay insurance premiums.
④ Handle import customs clearance procedures, including obtaining import licenses or other official certificates, and paying relevant taxes and fees.