FOB shipments Responsibility of buyer and seller

Posted on 10 April 2023 Category : Inco Terms

Responsibility of buyer and seller under FOB terms of shipping

The information provided here is part of Import Export Training course online

The Buyers and Sellers are suggested to use Incoterms 2020, the latest version of delivery terms for movement of goods. Click here to read the extract of Inco Terms 2020, easily explained.

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.

Free 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;

(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;

(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?

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The Exporter and Importers may use latest version of Inco Terms 2020 for movement of their goods. Click here to read the content of Incoterms 2020, easily explained

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

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Comments

QUOINA DELA CRUZ: On 04 April 2014 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: On 28 June 2014 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: On 19 November 2014 Free on board, not freight on board

Dr. Dipak Hadawale : On 13 February 2015 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: On 13 February 2015 Hi Dr.Dipak Hadawale, If insurance covered the risk of natural calamities, the loss can be claimed due to Katrina hurricane

Nilee: On 24 June 2015 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: On 28 November 2015 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: On 15 June 2016 Thank you for kind explanation. I wonder who shoulde be an exporter in FOB or FCA? Thank you again.

Jitendra Keswani : On 11 August 2016 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: On 05 September 2016 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 : On 20 November 2016 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: On 23 May 2017 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: On 05 October 2017 who will bear the cost of shipping documents. there is charges to attest invoice and certificate of origin by Chamber of commerce

Kuznetsov GAVRIIL Mikhailovich: On 25 October 2018 I am a Broker to a Direct Mandate working with a reputable refinery, and we are to you, esteem buyers that the petroleum products you are looking for is available in our Tanks and Reservoir for immedaite lift and supply. SUCH AS 1) JP54 2) JPA1 3) MAZUT 4) AGO 5) LNG 6) LPG 7) D2 8) D6 9) REBCO 10) EN590 Please contact us via our official email address. kuznetsovgavriil.mikhailovich@mail.ru Thanks. Kuznetsov GAVRIIL Mikhailovich

Prateek Dewan: On 30 November 2018 Very helpful article

Siggi: On 19 July 2019 Very useful, thank you!

Shiva kumara Shapur: On 12 July 2020 We are a seller my agent says he need fawb and carting info first then he can file shipping bill.. but buyer agent says he wants goods to be screening first to issue AWB.. who is correct..

FOB shipments Responsibility of buyer and seller

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