Mastering the Legal Definition of F.O.B.: A Must-Know Guide for Business Owners in Contract Negotiations

As a business owner, it is important to understand the legal definition of Free on Board (f.o.b.) when entering into contracts for the delivery of goods. F.o.b. is a term used in quotations or contracts between a seller and a buyer of goods to be delivered. It is usually followed by a defined location, often either the seller’s or the buyer’s place of business.

The term f.o.b. means that the seller is responsible for delivering the goods to the defined location and assuming the risk of loss until then. This means that if the goods are damaged or lost during transit, the seller is responsible for the cost of replacement or repair.

For example, if a business owner in New York purchases goods from a supplier in California with an f.o.b. Los Angeles agreement, the supplier is responsible for delivering the goods to the Los Angeles location and assuming the risk of loss until then. Once the goods are delivered to the Los Angeles location, the responsibility for the goods transfers to the buyer.

It is important to note that f.o.b. only applies to the delivery of goods and does not include any other costs such as insurance or taxes. These costs must be negotiated separately between the buyer and seller.

Understanding the legal definition of f.o.b. is crucial for business owners when negotiating contracts for the delivery of goods. It ensures that both parties are aware of their responsibilities and liabilities in the event of loss or damage during transit.

Talk to a Fitter Law attorney: as a business owner, it is important to be knowledgeable about the legal definition of f.o.b. when entering into contracts for the delivery of goods. By understanding the responsibilities and liabilities associated with f.o.b., business owners can protect themselves and their businesses from potential losses