Question

What is the difference between free on board (FOB) destination and free on board factory? Give examples.

Answer 1

"Free on board (FOB) shipping point" and "free on board destination" are international exchange terms that determine where the title of products are exchanged to the purchaser from the merchant. FOB shipping point demonstrates that the title of products is exchanged from the merchant to the purchaser when the merchandise are set on a conveyance vehicle. Conversely, FOB destination demonstrates that the title of merchandise exchanges from the dealer to the purchaser when the products are conveyed to the purchaser's destination.

Since FOB shipping point exchanges the title of the shipment of merchandise when the products are put at the shipping point, the lawful title of those products is exchanged to the purchaser. Accordingly, the vender isn't responsible for the products amid conveyance.

For instance, accept Company ABC in the U.S. purchases electronic gadgets from its provider in China and it signs a FOB shipping point understanding. On the off chance that the assigned bearer harms the bundle amid conveyance, the organization assumes full liability and can't request that the provider repay the organization for the harms. The provider is only responsible for conveying the electronic gadgets to the transporter.

Conversely, with FOB destination, the title of proprietorship is typically exchanged at the purchaser's stacking dock, post office box or place of business. Once the products are conveyed to the purchaser's predetermined location, the title of responsibility for merchandise exchanges from the vender to the purchaser. Consequently, the dealer lawfully possesses the merchandise and is responsible for the products amid the shipping procedure.

For instance, expect Company XYZ in China purchases PCs from a provider in the United States and it consents to a FOB destination arrangement. Accept the PCs were never conveyed to Company XYZ's destination. The provider assumes full liability for the PCs and should either repay Company XYZ or reship the PCs.