Freight Terms of Sale What exactly does FOB stand for? The most common payment method is a bank wire that works this way: You have the supplier develop sample(s) until you are confident they know exactly what you want. Incoterms, often called trade terms or shipping terms, are an international contract of sale. FOB Add-on Terms. I hope you are enjoying reading all. This term is typically used in sales contract, and designates a location for the delivery of goods. This does little to describe how it works in practical terms, however. For example, FOB Dallas means that the seller would provide the goods at the seller’s expense to Dallas. These imply that the net payment is due in either 7, 10, 30, 60, or 90 days after the invoice date. Some add-on terms may be included on the freight invoice, bill of lading, or other forms of shipping documentation. What are the differences? On FOB (Free On Board) shipping terms the buyer is responsible for the shipment from the goods being loaded onto the ship in the country of origin. Other ways of expressing the FOB Destination are "FOB Destination Name". DDP (Delivered Duty Paid) terms mean the seller will deliver the shipment to the location requested by the buyer and pay … Incoterms is short for International Commercial Terms. FOB stands for "free on board," although it is also sometimes defined as "freight on board." These add-on terms may include the following: FOB Origin, Freight Prepaid: The seller/shipper pays the cost of shipping while the buyer/receiver of goods assumes the responsibility of goods at the point of origin. FOB stands for “free on board”. A good rule of thumb when doing business in international trade is that you should buy FOB and sell CIF. Its use would be “FOB ” where would be the city or place where the goods would be left. For example, if the invoice was dated June 10 and you used one of the most used payment terms, Net 30, then the payment would be expected before July 9. It is important to have an understanding of cost and freight (CFR), cost, insurance and freight (CIF) and Free on board (FOB). When used with an identified physical location, the designation determines which party has responsibility for the payment of the freight charges and at what point title for the shipment passes from the seller to the buyer. FOB and CIF are the two most popular price terms of the Inco terms. The reason is very obvious. EXW and FOB are far and away the two most common incoterms. Why is this a good rule to follow? I have written detailed articles about Inco Terms of deliveries under Exports and Imports in this web blog. Less often, a buyer will use the shipping term FOB Origin or FOB Shipping point. There is much talk in the trade world about incoterms and how something is shipped; these terms have their own nuances. What is the most common payment term requested by Chinese suppliers? FOB Destination is the standard and most common FOB term used by buyers. Free on board indicates whether the seller or the buyer is liable for goods that are damaged or destroyed during shipping. You send a 30% deposit (by T/T) before production starts. Sponsored Links . The seller is the owner of goods while in transit and is responsible for any loss or damage up to the time of delivery. Probably one of the more common terms that people have questions about in the freight industry in terms of sale. Responsibility of buyer and seller under FOB terms of shipping. Cosmo has defined the 2010 Incoterms abbreviations, such as FOB, CFR, and DAP for international trade. Should you buy CIF or FOB? 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