Sales Agreement Fob

The word CFR stands for cost and freight used in international trade. When the sales contract is concluded on a CFR basis, the seller is responsible for the maritime transport of the goods to the port destination and the provision of the necessary documents to the buyer. Under the CFR contract, the seller is not responsible for transport insurance against the probable risk of loss or damage to the cargo during transport. The buyer is solely responsible for the acquisition of transport insurance in order to minimize losses at sea. Although FOB has long been referred to as “Freight On Board” in sales contract terminology, this should not be done, as it does not exactly correspond to the importance of the acronym as stated in the PEC. [7] In North America, FOB is included in a sales contract to determine where responsibility for the goods passes from the seller to the buyer. FOB stands for “Free On Board”. There is no payment by post by the buyer for the transport costs of the goods. There are two possibilities: “FOB origin” or “FOB target”. “FOB origin” means that the transfer takes place as soon as the goods are safe on board the transport. `place of destination FOB` means the transfer at the time the goods are withdrawn from transport to the place of destination.

“FOB origin” (sometimes referred to as “FOB shipping” or “FOB shipping station”) means that the sale on the seller`s shipping dock is considered complete and therefore the buyer of the goods is responsible for transportation costs and liability during transport. In “FOB destination”, the sale at the buyer`s door is completed and the seller is responsible for the transport costs and liability during transport. [6] [7] A 2018 study by Ki-Moon Han of the Korea Research Society for Customs examines the complexity of FOB contracts and claims they are often misunderstood. According to Han, more demanding contracts are increasingly being used to meet the needs of international dealers. The author notes that there is often confusion because the parties to contracts fail to understand FOB incoterms, sales contracts, transport contracts and credits. Han urges companies to exercise caution and clarify the type of FOB they take so that risks and liabilities are clear. FOB is on board free of charge. Under this agreement, the seller is responsible for the goods until they are loaded onto the ship….

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