FOB or “Free on Board” is a shipping term used to indicate the receiving party is responsible for the shipping charges. Often the buyer is typically responsible for the charges, but if the terms of the agreement state FOB; the seller pays for the transportation. The transportation charges are laid out in the terms agreement between the buyer and the seller under the “FOB shipping point” and “FOB destination” in the United States and Canada. The term differentiates when the title of the goods is passed from the buyer to the seller.
The terms are specified as follows:
- FOB Shipping Point – The title of the goods is passed to the buyer at the shipping point.
- FOB Destination – The title of the goods is passed when the buyer gets to the destination.