The Incoterm FOB is used for maritime transport. It is one of the most known Incoterms in the world of international trade.
What is the Incoterm Free On Board?
Incoterms represent the obligations and responsibilities of the buyer and seller in an international transaction. Incoterms are divided into two main categories: Multimodal Incoterms and Ocean Incoterms. The FOB Incoterm or Free On Board is part of the maritime Incoterms category. In French, the FOB Incoterm is translated as “without expenses on board”.
The obligations of the seller and the buyer with the Incoterm FOB?
The Incoterm FOB is one of the most known Incoterms of maritime transport. It designates the rules of an international commercial exchange between an importer (buyer) and an exporter (seller). Before using the Incoterm FOB as a rule, it is important to know the responsibilities and obligations of the buyer and the seller.
The obligations of the seller and the buyer with the Incoterm FOB?
When the Incoterm FOB is used, the seller bears the responsibility until the exported goods arrive at the vessel chosen by the buyer in the commercial contract.
The seller is responsible for :
- Packing the goods.
- Paying the transportation costs to the ship terminal chosen by the buyer in the commercial contract.
- Loading the goods on board the vessel.
- Fulfill the customs formalities related to the export of the goods.
With the FOB Incoterm, the buyer becomes responsible for the goods as soon as they are loaded on board the vessel at the departure terminal.
The buyer’s obligations:
- Pay the transport insurance.
- Pay the sea carrier.
- Complete and pay the customs formalities related to the import.
If you decide to use the Incoterm FOB for your international contracts, you must define in advance with your partner the company which will be in charge of the cargo securing costs. This is an important detail in the execution of a commercial contract under Incoterm FOB.
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