Ownership Transfer
Financial liability shifts from the manufacturer to the purchaser at the moment of loading goods onto a designated transport vessel. Free on board designates the specific point in the supply chain where legal title and risk of loss move from the fabrication house to the buyer. Parties choose between shipping point and destination variants to settle who pays for transit damage and insurance premiums.
Logistics Cost
Transportation charges relate to the location of this legal transition. When the buyer accepts delivery at the factory gate, all subsequent freight costs and export clearance fees belong to that buyer. This arrangement requires the buyer to manage the carrier selection and track the transit progress.
Sellers who prefer to retain control over the delivery route often negotiate to shift the point of transfer until the final destination.
Inspection Verification
Quality control protocols depend on the stage of movement where this transfer occurs. Components arriving at the dock undergo visual assessment for moisture damage or physical stress resulting from the transit process. Technicians verify that the physical state of the assembly matches the agreed specifications before the transfer of legal title completes.
Discrepancies identified during this window allow the buyer to initiate claims against the carrier or the supplier. Successful arrival of the hardware confirms the fulfillment of the shipping contract obligations.
