Saturday 6 November 2010

FOB >>Free On Board

FOB


Briefly definition[1]
FOB: Free on board
Seller: have to deliver goods cleared for export
Risk: overtakes to buyer at delivery
Buyer: set up and pays for further transport costs and desired insurance.
Definition


The ‘free on board’ (FOB) contract ,as a ‘flexible instrument’ ,has reliably defied an suitable definition .This apart, the key propel of an FOB contract is the of  seller’s  acceptance to place ,at his own expenditure , goods ‘free on board’ the ship for shipment to the buyer[2].

The FOB contract has assured oddness. For instance, keep that there is an agreement to be consequence, a seller under an FOB contract is beneath no responsibility to protected a shipping space for the goods or for assuring the goods.  In the occurrence of his placing the cost of carriage and insurance , this regularly is passed to the account of the buyer[3].

Classification

In some case , the classification of FOB contracts frequently is based on the sort of duties undertaken by the parties in known cases. The importance in this text will be on so-called ‘classic’ FOB contracts. A’classic’FOB contract has three main features such as

1.) The seller is certain to create some progress arrangements for the shipment of the goods and the expense to be acquired by him that does not go away from the goods being raised over the ship’s rail;
2.) The FOB seller becomes a party to the contract of carriage either at the moment of lifting the goods on board or before; and
3.) The seller is required to protect a bill of lading on the common or regular terms in the trade; it is not yet resolved if the bill of lading essentially will be in the  name of buyer  on contract, thus, might include a condition for performance assurance. This basically signifies that aside from given that for the tendering of the usual shipping documents, the contract might specify that, in the occurrence some of the documents are gone, the buyer is required to pay the cost if in place of such documents the seller offers a performance guarantee.


[1] J.F. Morrossey and J.M> Graves , International sales law and arbitration , ( Kluwer Law International , Frederick , 2008 ) 150-151
[2]D Campbell ,Remedies for International Sellers of Goods 2006 , ( Yorkhill Law Publishing , 2006)  2158 -2159
[3] D Campbell (n1) 2099-2010
[4]

[4]C Malta , ‘Wholesale Suppliers. What is 'FOB'? 'Wholesale Tips' series’ [2009]
accessed 6 November 2010

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