(1) About the issue of notification
The FOB terms involve two sufficient notices. One is that after the buyer charters a ship, he should give the seller sufficient notice of the ship name, loading time and place; the other is that the seller notifies the buyer when the goods are loaded. In the first case, if the buyer does not give sufficient notice, the designated ship does not arrive on time or fails to load the goods on time, or stops loading earlier than the specified time, and the resulting loss or damage to the goods shall be borne by the buyer. In the second case, since the risk of the goods is transferred from the seller to the buyer when the goods are loaded on the ship, the seller must notify the buyer when the goods are loaded so that the buyer can take out insurance. Otherwise, the seller shall be responsible for the losses suffered by the buyer. The seller notifies the buyer by electronic communication, such as e-mail, fax, etc.
(2) Issues regarding the transport contract
The 2010 Incoterms stipulates that the seller has no obligation to enter into a transport contract for the buyer. However, if it is based on the buyer’s request or trading practices and the buyer does not make any contrary requests in a timely manner, and the buyer bears the risks and costs, the seller may enter into a transport contract for the buyer on general terms. In any of the above cases, the seller has the right to refuse to enter into a transport contract for the buyer. If the seller enters into a transport contract, it shall promptly notify the buyer.
(3) Regarding the burden of loading costs
When the transaction is concluded under FOB terms, the seller shall be responsible for paying all costs before the goods are loaded on board. However, there is no unified interpretation of the concept of “loading” among countries, and the customs or practices of various countries are not completely consistent as to who shall bear the various costs related to loading. If liner transportation is adopted, the shipowner is responsible for loading and unloading, and the loading and unloading costs are included in the liner freight, which will naturally be borne by the buyer who is responsible for chartering the ship; while in chartered transportation, the shipowner generally does not bear the loading and unloading costs. Therefore, it is necessary to clarify who shall bear the various loading costs.
(4) The seller is not obliged to provide the buyer with an insurance contract. However, when the buyer requests, the seller must provide the buyer with the information required for the buyer to obtain insurance. At this time, all risks and costs (if any) shall be borne by the buyer.
(5) About the connection between ship and cargo
Under FOB terms, the cargo-carrying vessel is designated by the buyer and is also a prerequisite for the seller to load the goods. Therefore, the connection between ship and cargo is an important part of the smooth execution of the contract. According to relevant laws and practices, if the buyer fails to dispatch the ship on time, including dispatching the ship to the port of shipment in advance or delaying the dispatch of the ship to the port of shipment without the consent of the other party, the seller has the right to refuse delivery. All losses arising therefrom, such as dead freight, demurrage and storage fees, shall be borne by the buyer. On the contrary, if the ship designated by the buyer arrives at the port of shipment on time but the seller fails to prepare the goods, the above-mentioned expenses shall be borne by the seller.
In short, when trading under FOB terms, the shipment period and port of shipment must be carefully stipulated. After the contract is signed, the parties should also strengthen communication and close cooperation in terms of preparing goods and dispatching ships to ensure a good connection between ship and cargo.