FOB shipments Responsibility of buyer and seller

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Responsibility of buyer and seller under FOB terms of shipping


I have written detailed articles about Inco Terms of deliveries under Exports and Imports in this web blog. I hope you are enjoying reading all.
 

In this article, let me add the responsibilities of exporter and importer if terms of delivery of shipment is on FOB basis.
 

Basic tips to exporter while contracting terms of delivery on FOB basis copyFree on Board (FOB): The Seller fulfills his obligation when he delivers the goods on the ship rails at the named port of shipment. The buyer has to bear all costs and risks from that point of time. Cartage up to the port, inland insurance, port dues and loading charges into the ship are to be borne by the seller. The seller has to take care of all these expenses. The term can only be used for sea or inland water transport.

If an import export shipment is under FOB terms of delivery, what are the duties and responsibilities of an Exporter? As per latest Inco Terms 2010, the duties of an exporter under FOB shipping term is as follows:
 

 

Duties of the exporter under FOB
 

(A) Supply the contracted goods in conformity with the contract of sale and deliver the goods on board the vessel named by the buyer at the named port of shipment;

(B) Bear all costs and risks of the goods until such time as they shall have effectively passed the ship’s rail. In other words, once goods are placed on ship’s rail, title to the property passes to the buyer and so risks too;

(C) Provide at his own expense the customary clean shipping documents as proof of delivery of goods;

(D)Provide export license and pay export duty, if any ; and

(E) Pay loading costs.
 

OK, now let us discuss about the duties of Importer under FOB terms. If a delivery terms of an international business is on Freight On Board (FOB) basis, the importer’s duties and responsibilities are given under:
 

Duties of Importer under FOB terms of delivery.
 

(A) Reserve the necessary shipping space and give due notice of the same to the exporter;

(B) Bear all costs and risks of the goods from the time when they shall have effectively passed the ship’s rail;

(C) Pay freight;

(D)Pay unloading costs and

(E) Pay the price as provided in the contract to exporter.

In this article, I have explained about the duties and responsibilities of Importer and Exporter under a shipment on FOB basis. I have tried to explain the duties and responsibilities of importer and exporter on FOB terms in simple language to make you easily understand.

Did you like this article about duties and responsibilities of exporter and importer under FOB terms of shipping? Do you have different thoughts and experience to add about responsibilities and duties of importer and exporter under FOB terms of delivery of international business?

Share below your comments about this article about Duties and Responsibilities of Exporter and Importer on a shipment under FOB terms of delivery.

 

 


The above information is a part of Online Training Course on howtoexportimport


 

What is FOB price in Exports and Imports and how it works

 

Basic tips to exporter while contracting terms of delivery on FOB basis

 

Who decides shipping carrier on FOB shipments

 

Difference between ex works and FOB

 

Difference between FCA and FOB in terms of Delivery of goods

 

Terms used in shipping such as Flatbed,Full Liner Terms,Free On Board,FOB Airport,FOB Freight Allowed


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Comments


QUOINA DELA CRUZ: helo! I am from the Philippines and is trying to export silver jewelries to Saudi Arabia. Can you help me how to compute the price that I should give to my buyer based on FOB pricing? thanks!

K.RAMESH: any possibility for giving an option to the seller to choose the carrier to ship the cargo under FOB terms. since the option was given to the seller to choose the carrier to ship and later something goes wrong then in this case who is responsible for the loss and risk. either the shipper or buyer ??

Jef: Free on board, not freight on board

Dr. Dipak Hadawale : We have shipped one consignement to USA by sea CIF basis. We had paid premisum and insured consigenment. Accidently, it met with katrina.hurricane in transit and drums get damaged.In this case, Can importer file for claim? Insurance company will pay claim to importer?As shipment is cf basis, our agent is saying that importer in USa has to file for claim and insurance company will pay to them.We have not recived any payment for this shipent from US importer, allthough payment terms were against documents.

Admin: Hi Dr.Dipak Hadawale, If insurance covered the risk of natural calamities, the loss can be claimed due to Katrina hurricane

Nilee: Very helpful which have you provided by this article. Now I have a clear idea about importing goods. I searched a solution for my problem through other sites. But it was impossible. This is the best site. Thank you very much!

md.mujibur rahman: dear sir good evening . i want to import some goods from china to Bangladesh. pls help me for fob price best regards md.mujibur rahman

Jinsu Kim: Thank you for kind explanation. I wonder who shoulde be an exporter in FOB or FCA? Thank you again.

Jitendra Keswani : I am Jitendra Keswani working in private organisation. I wanted to start a Exp/Imp Business but i don't have much knowledge about the business. I have gone through your website and from your website i got some knowledge about the business. I want more information regarding buyers/seller, how to contact them or how to get the clients, what commodity i should opt for, import/ export. I request you to please help me out for the following issues so i can start my business and run it smoothly.

Sameer Makki: When the Shipment is FOB who will get named as the Shipper on the Bill of Landing. Also to whom will the bill of landing will be issued upon loading the document on the ship? If the consignee has already made the payment then will the shipping company issue the bill of landing in the name of the consignee?

frank brown : We are interested in purchasing plastic panel and we sincerely hope to establish a long-term business relation with your company. Please kindly send me a link that will take me directly to the types of plastic panel that you carry with the prices attached to it. Also, inform me about the Delivery time or FOB, and payment terms warranty. Your early reply is highly appreciated.

Manish k loya: Dear admin, Thanks for contributing such a valuable content on your domain. I would like to know that if I agree to deliver on fob basis and payment terms shall be irrevocable l c against delivery of bill of lading, if in case after delivering the consignment banker finds discripency in l c or product not meets specifications then bank would reject my payment? And the goods shall be delivered to the buyer as he is booking the ship vessel

Manish k loya: Dear admin, Thanks for contributing such a valuable content on your domain. I would like to know that if I agree to deliver on fob basis and payment terms shall be irrevocable l c against delivery of bill of lading, if in case after delivering the consignment banker finds discripency in l c or product not meets specifications then bank would reject my payment? And the goods shall be delivered to the buyer as he is booking the ship vessel

Junaid: who will bear the cost of shipping documents. there is charges to attest invoice and certificate of origin by Chamber of commerce

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