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Sales Agreement Fob

FOB stands for Free on Board. Under this agreement, the seller is responsible for the goods until they are loaded onto the ship. The seller is not responsible for the disposition of the loading port to the unloading port and the exporter is not paid according to fob conditions. Like the CFR base, the risks are borne by the importer and he will pay the marine insurance premiums. In this case, the importer reserves the container with its own vessel or the vessel recommended by the importer. The borrower does not enter into gas purchase contracts with firm receiving obligations for more gas than is necessary for the borrower to meet its obligations under the FOB purchase and sale contracts, the LNG sales contract and all other LNG sales contracts entered into under this contract. In North America, FOB is entered into a sales contract to determine where the responsibility for the merchandise passes from the seller to the buyer. FOB stands for “Free On Board.” There is no position payment by the buyer for the fees that the goods can get on the transport. There are two possibilities: “FOB Origin” or “FOB Objective.” “FOB origin,” the transfer as soon as the goods are safe on board the transport.

“FOB destination,” the change when goods are removed from transport to destination. “FOB-Ursprung” (sometimes called “FOB-Versand” or “FOB-Versandstelle” indicates that the sale on the seller`s shipping dock is considered completed and that the buyer of the goods is therefore responsible for the transport costs and liability during the transport. With “FOB-Ziel”, the sale is concluded at the buyer`s door and the seller is responsible for transportation costs and liability during transportation. [6] [7] Sometimes fob is used in the sale to keep commissions by the external seller. We don`t know where it came from. These two terms have a specific meaning in commercial law and cannot be changed. But FOB terms should not be used, and often not. In this case, the specific terms of the agreement can vary considerably, including the party, buyer or seller, who pays the loading and shipping costs and/or when responsibility for the goods is transferred. The final distinction is important in determining the liability or risk of loss of goods that have been lost or damaged from seller to buyer during transportation. [7] [8] The word CFR means cost and freight used in international trade. When the sales contract is executed on the basis of CFR, the seller is responsible for making the goods transported by sea to the port available and making the necessary documents available to the purchaser. Under the CFR contract, the seller is not responsible for marine insurance against the likely risk of loss or deterioration of the cargo during transit.

The buyer is solely responsible for the purchase of marine insurance in order to minimize losses at sea. Although FOB has long been called “Freight On Board” in the terminology of the sales contract, this should be avoided because it does not exactly correspond to the meaning of the acronym as stated in the UCC. [7] A 2018 study by Ki-Moon Han of the Korea Research Society for Customs examines the complexity of FOB contracts and explains that they are often misunderstood. According to Han, more sophisticated contracts are increasingly being used to meet the needs of international distributors. The author notes that there is often confusion because parties to incoterms incompreos contracts have a lack of knowledge of fob, sales contracts, transport contracts and letters of credit. Han urges companies to exercise caution and clarify the type of FOB they contract so that risks and commitments are clear.