Free on board (FOB)

Implies that distribution services like transport and handling performed on goods up to the customs frontier (of the economy from which the goods are classed as merchandise) are included in the price.

Free On Board

In maritime international commerce, an agreement between a seller and a buyer indicating that the seller has fulfilled his/her obligation to deliver a good when he/she has transferred it to the ship on which it will be transported. All cost and risk transfers to the buyer when the good crosses the ship's rail. The buyer designates the ship onto which the seller must deliver the good. See also: United Nations Convention on Contracts for the International Sale of Goods, Incoterm.

free on board (FOB)

Used in commodities contracts to indicate the geographical point to which delivery is included in the price. After this point, the buyer is responsible for all risks and delivery costs. The FOB point is only important to someone who sells or buys a futures contract with the intention of making or taking delivery of the specific commodity.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

free on board (f.o.b.)

a term used to denote the respective contractual obligations of sellers and buyers of a good which is exported. Under a f.o.b. contract the seller pays the cost of transporting the goods to the port of shipment and loading charges, plus all insurance cover up to this point. From then on it is the buyer who bears the cost of transporting, and insuring, the good to its final destination. See COST, INSURANCE AND FREIGHT, COST AND FREIGHT, EXPORTING.