UK: A sales contract, mainly used for bulk cargoes (coal, grain), whereby the seller is responsible for the goods until loaded (‘over ship’s rail’) and the buyer is responsible for all charges (including insurance) thereafter.
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The designation of the place of free on board determines the responsibility for insuring shipped goods. For example, “free on board origination” or just “free on board” means that the seller’s responsibility for damage ends when the goods are loaded onto the carrier’s truck, train, or ship. At that point, any damage is the responsibility of the buyer.”Free on board destination” means that the shipper assumes responsibility for damage to the shipped goods until the goods are off-loaded at the buyer’s location. In either case, risk managers need to know when their responsibility for damage begins and ends in order to avoid gaps in coverage.
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The term has special significance in Marine Insurance, where it is vital to determine when title passes from the seller to the buyer. If the materials are shipped FOB point of destination, the seller is liable for damage caused during the course of transportation. If the material is shipped FOB point of departure, the buyer becomes liable for it.