<P> 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 . For example, "FOB New York (Incoterms 2000)". Incoterms apply to both international trade and domestic trade, as of the 2010 revision . </P> <P> In North America, FOB is written into a sales agreement to determine where the liability responsibility for the goods transfers from the seller to the buyer . FOB stands for "Free On Board" or so there is no line item payment by the buyer for the cost of getting the goods onto the transport . There are two possibilities: "FOB origin", or "FOB destination". "FOB origin" means the transfer occurs as soon as the goods are safely on board the transport . "FOB destination" means the transfer occurs the moment the goods are removed from the transport at the destination . "FOB origin" (also sometimes phrased as "FOB shipping" or "FOB shipping point") indicates that the sale is considered complete at the seller's shipping dock, and thus the buyer of the goods is responsible for freight costs and liability during transport . With "FOB destination", the sale is complete at the buyer's doorstep and the seller is responsible for freight costs and liability during transport . </P> <P> The two terms have a specific meaning in commercial law and cannot be altered . But the FOB terms do not need to be used, and often are not . In this case the specific terms of the agreement can vary widely, in particular which party, buyer or seller, pays for the loading costs and shipment costs, and / or where responsibility for the goods is transferred . The last distinction is important for determining liability or risk of loss for goods lost or damaged in transit from the seller to the buyer . </P> <P> For example, a person in Miami purchasing equipment from a manufacturer in Chicago could receive a price quote of "$5000 FOB Chicago", which would indicate that the buyer would be responsible for the shipping from Chicago to Miami . If the same seller issued a price quote of "$5000 FOB Miami", then the seller would cover shipping to the buyer's location . </P>

Who is responsible for the freight costs when the terms are fob shipping point