What is free or freight on board (FOB)?

Running Head : International commerce and Free on Board shipping
INTERNATIONAL COMMERCE AND FREE ON BOARD SHIPPING
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International commerce and Free on Borad shipping1
Introduction
The term Free on Board is legislation in global trade that specifies the point at which
cost, respective obligations and risk engaged in goods delivery transfers from the seller of the
contractual goods to the buyer. The delivery of commercial goods under the terms of free
onboard is under the standards of Incoterms which is circulated by a foreign chamber of
commerce. FOB is applied only in the case of waterway carriage or sea freight which is not
containerized1. The term FOB is used in contemporary domestic shipping to define the shipping
point at which there is no obligation lies upon the seller of goods for shipping expenses. FOB is a
term used in the international trade law which designated the cost of contracted goods to involve
delivery at the expense of the seller at a particular point2. The term FOB is used to determine the
basis and obligations for making payment relating to freight charges. Secondly, the shipping
point where the title shifts from the seller of the goods to the buyer3. The buyer in FOB assumes
1 Abrahamsson, Bernhard J. International Ocean Shipping: Current Concepts and Principles.
Routledge, 2019.
2 Shadikhodjaev, Sherzod. "The “Regionalism vs Multilateralism” Issue in International Trade
Law: Revisiting the Peru–Agricultural Products Case." (2017) Chinese Journal of International
Law 16.1: 109-123.
3 Patalinghug, Epictetus E. "A Study on International Shipping in the Philippines." (2019).