FOB, which stands for "free on board," refers to a shipping term that indicates when ownership and responsibility for goods transfer from the seller to the buyer. The FOB value is the price of goods at the point of origin, excluding costs such as carriage, insurance, and freight. Essentially, it represents the domestic price of goods in the country where they are produced.
The term FOB value is commonly used in international trade and shipping contracts. It plays a crucial role in determining liability for goods during transit. Understanding FOB is important in various legal areas, including contract law and commercial law. Users may encounter this term when drafting or reviewing shipping agreements or when dealing with import/export regulations. Legal templates from US Legal Forms can assist users in creating these documents accurately.
Here are a couple of examples of abatement:
For instance, if a company in the United States sells machinery to a buyer in another country, the FOB value would be the price of the machinery at the seller's location, excluding shipping costs. The seller is responsible for the goods until they are loaded onto the transport vessel.
(Hypothetical example) A furniture manufacturer in California sells a shipment of chairs to a retailer in Canada. The FOB value is set at $10,000, which includes only the cost of the chairs, not the shipping fees.
| Term | Definition | Key Differences |
|---|---|---|
| FOB Value | Price of goods at the point of origin, excluding shipping costs. | Focuses on ownership transfer at the shipping point. |
| CIF Value | Cost, insurance, and freight included in the price of goods. | Includes shipping and insurance costs, unlike FOB. |
If you are involved in a transaction that uses FOB terms, ensure you understand the implications for ownership and liability. Review any contracts carefully to confirm the FOB value and related responsibilities. For assistance, consider using US Legal Forms' templates to create or review shipping agreements. If the situation is complex, consulting a legal professional may be beneficial.
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| Attribute | Details |
|---|---|
| Typical Use | International shipping agreements |
| Ownership Transfer | At the point of loading onto the transport |
| Exclusions | Carriage, insurance, freight |
FOB stands for "free on board," indicating the point at which ownership of goods transfers.