INCOTERMS2000
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FOB
FOB (Free On
Board) is one of the commoner trade terms in use. Yet this 'common'
aspect of the term has resulted in the myriad definitions found
all over the world for FOB.
Some of these
directly contradict others, and many are supported by domestic legislation
making such definitions unique to a specific country or port.
In defining
FOB as an INCOTERM, it is expressed as being Monomodal and it can
only be used for transactions where seafreight is the main carriage.
Therefore, as an INCOTERM, there is no application for FOB in road,
rail or air transport.
Under INCOTERMS
2000, risk and responsibility pass from the seller to the buyer
when the goods pass over the (named or unnamed) ship's rail at the
(named) port of loading, cleared for export by the seller.
For FOB to apply,
the seller must be in the physical position of being able to load
the cargo over the rail under their own direct control i.e. the
loading is undertaken by the seller's own labour, or by an agent
that is under the contractual control of the seller. Further this
process would have to be monitored by both the seller and buyer
or their representatives.
Generally, from
the modern deep-sea export perspective, this control often cannot
be achieved as the seller is either not allowed into the harbour
area or, even in those extreme circumstances where they are, they
have no influence over the party loading the vessel.
The INCOTERM
FOB still has an application in some markets, but these are more
and more in the minority. Note that the use of an 'on-board' Bill
of Lading or mate's receipt could be appropriate in recording the
passage of risks under FOB making FOB one of the few terms still
unavoidably dependant on such documents.
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