Replies to post #234637 on Minerco Inc (fka MINE)

[Bottoms Upward]

Incoterms[edit]

Further information: Incoterms

Under the Incoterms 2010 standard published by the International Chamber of Commerce, FOB is only used in Sea Freight and stands for "Free On Board", and always used in conjunction with a port of loading.[1] Indicating "FOB port" means that the seller pays for transportation of the goods to the port of shipment, plus loading costs. The buyer pays cost of marine freight transport, insurance, unloading, and transportation from the arrival port to the final destination. The passing of risks occurs when the goods are loaded on board at the port of shipment.

The use of "FOB" originated in the days of sailing ships. When the ICC first wrote their guidelines for the use of the term in 1936,[2] the ship's rail was still relevant as goods were often passed over the rail by hand. In 1954 in the case of Pyrene Co. Ltd. v. Scindia Navigation Co. Ltd.,[3] Justice Devlin, ruling on a matter relating to liability under an FOB contract, described the situation thus:

"Only the most enthusiastic lawyer could watch with satisfaction the spectacle of liabilities shifting uneasily as the cargo sways at the end of a derrick across a notional perpendicular projecting from the ship's rail."

In the modern era of containerization, the term "ship's rail" is somewhat archaic for trade purposes as with a sealed shipping container there is no way of establishing when damage occurred after the container has been sealed. The standards have noted this. Incoterms 1990 stated, "When the ship's rail serves no practical purpose, such as in the case of roll-on/roll-off or container traffic, the FCA term is more appropriate to use." Incoterms 2000 adopted the wording, "If the parties do not intend to deliver the goods across the ship's rail, the FCA term should be used."[1] The criterion passing the ship's rail is no longer in use, having been dropped from the FOB Incoterm in the 2010 revision.

For example, "FOB Vancouver" indicates that the seller will pay for transportation of the goods to the port of Vancouver, and the cost of loading the goods on to the cargo ship (this includes inland haulage, customs clearance, origin documentation charges, demurrage if any, origin port handling charges, in this case Vancouver). The buyer pays for all costs beyond that point (including unloading). Responsibility for the goods is with the seller until the goods are loaded on board the ship. Once the cargo is on board, the buyer assumes the risk.

Due to potential confusion with domestic North American usage of "FOB", it is recommended that the use of Incoterms be explicitly specified, along with the edition of the standard.[4][5] For example, "FOB New York (Incoterms 2000)". Incoterms apply primarily to international trade, not domestic trade within a given country.

North America[edit]