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F.O.B. (Free on Board)

Definition

A term commonly used in the sale of goods to indicate which party bears the risk and expense of shipping. Under U.C.C. § 2-319, F.O.B. [place of shipment] indicates that the seller must ship the goods as specified in the contract or as provided by the U.C.C., and the seller bears the risk and expense of placing the goods in the carrier's possession for shipment. F.O.B. [place of destination] means that the seller bears the risk and expense of transporting the goods to the destination and tendering delivery to the buyer as agreed to by the parties and as provided by the U.C.C. In other words, F.O.B. [place of origin] means that the seller bears the risk and expense until the goods are transferred to the carrier, at which point the buyer assumes liability. F.O.B. [place of destination] means that the seller bears the risk and expense until the goods have been delivered to the buyer at the specified location.

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