The term 'F.o.b.,' which stands for 'free on board,' is a shipping term that indicates the point at which the responsibility for goods transfers from the seller to the buyer. It is crucial in determining who pays for freight charges and where the title of the goods passes. Typically, 'F.o.b.' is followed by a specific location, such as a shipping dock or warehouse, which clarifies the terms of the sale and delivery.
'F.o.b.' is commonly used in contracts related to the sale of goods, particularly in commercial transactions. It plays a significant role in logistics and shipping agreements, helping to define the responsibilities of both sellers and buyers. Understanding 'F.o.b.' is essential for parties involved in procurement, supply chain management, and shipping logistics. Users can find templates for contracts that incorporate 'F.o.b.' terms on platforms like US Legal Forms, which can help streamline the process of drafting legally binding agreements.
Here are a couple of examples of abatement:
Example 1: A company sells machinery to a buyer and specifies 'F.o.b. shipping point.' This means the buyer assumes responsibility for the machinery and any related shipping costs once it leaves the seller's facility.
Example 2: A retailer orders products and the agreement states 'F.o.b. destination.' In this case, the seller bears the shipping costs and risk until the goods arrive at the retailer's location. (hypothetical example)
| Term | Definition | Key Difference |
|---|---|---|
| F.o.b. shipping point | Responsibility transfers at the seller's location. | The buyer pays for shipping and assumes risk once the goods leave the seller's premises. |
| F.o.b. destination | Responsibility transfers at the buyer's location. | The seller pays for shipping and retains risk until the goods arrive at the buyer's location. |
If you are involved in a transaction that includes 'F.o.b.' terms, carefully review the contract to understand your responsibilities regarding shipping and risk. If you're drafting a contract, consider using legal templates from US Legal Forms to ensure that your agreement clearly outlines the terms. If you have questions or if the situation is complex, seeking advice from a legal professional may be beneficial.
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'F.o.b.' stands for 'free on board,' indicating the point at which ownership and responsibility for goods transfer from seller to buyer.