Investopedia explains 'Free On Board - FOB'
Contracts involving international transportation often contain abbreviated trade terms that describe matters such as the time and place of delivery and payment, when the risk of loss shifts from the seller to the buyer, as well as who pays the costs of freight and insurance.
The most commonly known trade terms are Incoterms, which are published by the International Chamber of Commerce. These are often identical in form to domestic terms, such as the American Uniform Commercial Code, but have different meanings. As a result, parties to a contract must expressly indicate the governing law of their terms.
It's important to realize that because this is a legal term, its exact definition is much more complicated and differs by country. It is suggested that you contact an international trade lawyer before using any trade term.
Related Definitions
Cost and Freight - CFR
Cost, Insurance and Freight - CIF
Ex Works - EXW
Free Alongside - FAS
Free Carrier - FCA
Incoterms
Delivered Ex Ship - DES
Delivered Duty Paid - DDP
Delivered Ex Quay - DEQ
Delivered At Frontier - DAF
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