The term FOB (Free on Board) is a so-called contractual clause in foreign trade transactions. This contractual clause is part of the Incoterms (International Commercial Terms). These were issued by the International Chamber of Commerce (ICC). The Incoterms rules set out both the rights and obligations of buyers and sellers with regard to international transactions.

The so-called FOB clause is one of the best-known clauses. Free on Board means that the seller is responsible for the goods. This responsibility applies until the goods are delivered on board of the ship designated by the buyer.The so-called transfer of risk from the seller to the buyer takes place as soon as the goods are on board. This is also the point at which the buyer bears the costs of transport.

Responsibilities for the seller

• The goods are loaded onto the means of transport by the seller
• The seller must complete all export formalities and customs formalities
• The seller takes care of the Transport to the export harbour
• The seller must unload the goods at the port of export and is also responsible for delivery on board
• The seller bears the costs of loading charges at the port of export

Responsibilities for the buyer

• The buyer is responsible for the transport from the export harbour to the import harbour
• The buyer is responsible for all import formalities as well as customs and taxes
• The buyer bears the charges for unloading at the port of import
• The buyer must take care of loading onto the respective means of transport at the port of import
• The buyer takes care of the transport to the destination and its unloading on site

If an FOB has been agreed, this means that the buyer concludes the transport contract at his own expense. In other words, he not only has to pay the freight costs, but also the shipbroker's fees, stowage costs and shipbroker's commission.

There are also FOB with modifications. For example, "FOB. shipped", which means that the seller is obligated to conclude the transport contract. The buyer bears the costs. This procedure is also often referred to as "non-genuine FOB". In the case of "FOB. stowed and trimmed", the costs for stowing on board are covered by the seller.