FOB Trade Process

- Mar 20, 2018 -

According to the interpretation of the International Chamber of Commerce (ICC) on FOB, the basic obligations of both buyers and sellers are given.

1. seller's obligations

(1) in the time or period stipulated in the contract, at the port of shipment, the goods are delivered to the vessel assigned by the buyer in the customary way, and the buyer is notified in time.

(2) conceit risks and expenses, and obtain export licenses or other official approval documents. When the customs formalities are required, all customs formalities required for the export of goods are required.

(3) the burden of the goods across the ship until all the costs and risks in the port of shipment;

(4) the cost of self payment is provided to provide the usual documents proving that the goods have been delivered to the ship. If the buyer and the seller agree to use electronic communication, all documents can be replaced by the same effective electronic data exchange (EDI) information.

2. buyer's obligation

(1) an import license or other official certificate approved for the risk and expense. When the customs formalities are required, the import of goods and all customs formalities through the transit of other countries and the payment of the expenses and transit fees are paid;

(2) responsible for chartering or space booking, payment of freight, and give the seller about the name of the vessel, loading point and required delivery time sufficient notice;

(3) the burden of the goods across all the costs and risks after the ship at the port of shipment;

(4) accept the documents provided by the seller of goods receipt and payment according to the contract.

3. note:

(1) from the point of delivery the buyer must bear all costs and risks of loss of or damage to the goods, that is to say if the goods in maritime distress or encounter pirates, with the seller, the buyer should not be the reason to refuse to pay the purchase price, so the seller can advise the buyer for cargo insurance.   

(2) the price of FOB includes all the domestic costs. If the goods are more or more profitable,

The domestic cost is not to be considered. If the goods is relatively small, we need a corresponding increase in price, because the unit cost increased a lot, the unit cost mainly includes: (the factory to the port or inland freight container warehouse), handling charges (especially some mechanical loading and unloading of cargo, LCL) fees, fees, fees, submit the head code inspection fee etc..