Do you use FOB in your standard Terms and Conditions? Does it say, FOB, Shipping Point – or FOB, Destination Point – ? Then pay attention to what follows, and start using INCOTERMS® 2010 for all your International transactions:
The US and Canada recognize FOB, Shipping Point or Destination Point as legal terms for the domestic shipment of goods. The term determines who pays for the shipment, and where the responsibility for the goods transfers from the seller to the buyer.
However, in Internationally Trade, it is possible that different jurisdictions interpret the term “FOB” differently, leading to confusion and misunderstanding. It is for this reason that the International Chamber of Commerce has defined INCOTERMS®. International contract can uniquely refer to these shipping terms: they have very a clear meaning independent of local jurisdictional interpretations.
Per INCOTERMS® 2010 the Term FOB means something very different than what it stands for in domestic US or Canada trade. For one, the term can only be only used for Maritime shipments:
Per ICC, the FOB Term, “Free On Board” means that the seller delivers the goods on board the vessel nominated by the buyer at the named port of shipment or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The buyer bears all costs from that moment onwards.
Using FOB, Shipping Point for International trade is confusing at best. Going forward I suggest that you use FCA, Shipping Point INCOTERMS® 2010 for your International Shipments instead.
Per INCOTERMS® 2010, FCA, Shipping Point stands for “Free Carrier”. This means that the seller delivers the goods to the carrier nominated by the buyer at the seller’s premises. The parties should be specific about the named place of delivery, as the risk passes to the buyer at that point.
Here you can learn more about INCOTERMS® 2010