FOB incorterm and consequences within ocean freight

Incoterms are international commercial terms for the execution of import and export transactions. In this case, we will elaborate in detail what is the FOB incorterm and its importance for the people affected. Through the FOB ("Free On Board"), the seller delivers the merchandise dispatched for export on board the ship, which will be docked at the port of shipment. At that time, the risks of loss or damage of merchandise from the seller to the buyer are transferred. This incoterm should always be used followed by the name of a loading port.

We must emphasize that this term is applicable exclusively for the means of maritime or ocean freight.

What do the seller and buyer commit to?

Obligations of the seller

Supply merchandise and invoice according to contract.
Dispatch the export goods, requesting and obtaining the corresponding permits, and paying the taxes and duties required.
Deliver the goods on board the vessel chosen by the buyer in the port agreed.
Assume responsibility for risks and costs related to the goods until delivery to the ship.
Help the buyer to obtain necessary documents for the import or to contract an insurance.

Obligations of the buyer

Pay the agreed price in contract.
Dispatch the import merchandise, and obtain the pertinent authorizations and licenses, while paying the necessary duties and taxes.
Accept the delivery of the merchandise if it is carried out as agreed.
Bear the risk of loss or damage of the merchandise from the time it is on board the vessel or from the expiration of the date agreed with the seller through no fault of the latter (that the vessel selected by the buyer does not dock in time, for example).
The buyer must reimburse all expenses incurred by the seller, for obtaining documents or information.

Within the ocean freight this Incoterm is quite used in the operations we do between buyer and seller.

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