Learning more about Incoterms®2010

Free on Board or FOB
(named port of shipment)
Incoterms®2010 is the ninth of
11 Incoterms (it is always plural)
for the class “Rules for Sea and
Inland Waterway Transport”.
According to the International
Chamber of Commerce
(ICC), in “the second class
of Incoterms®2010 rules, the
point of delivery and the place
to which the goods are carried
to the buyer are both ports,
hence the label ‘sea and inland
waterway’ rules”.
The ICC’s Incoterms®2010
identifies 10 obligations that
the seller might need to fulfil
in terms of Free on Board or
FOB: (1) general obligations
of the seller; (2) licences,
authorisations, security
clearances and other formalities;
(3) contracts of carriage and
insurance; (4) delivery; (5)
transfer of risks; (6) allocation of
costs; (7) notices to the buyer; (8)
delivery document; (9) checking,
packaging, marking; and (10)
assistance with information and
related costs.
The general obligations
of the seller are essentially
the provision of goods and
the commercial invoice in
conformity with the contract
of sale, which implies that
the documents stipulated in
the contract of sale must be
provided.
In respect of the licences,
authorisations, security
clearances and formalities, the
seller must obtain such at its own
risk and expense, and also must
carry out the customs formalities
necessary for the export of the
goods.
With respect to the contact
of carriage and the contract
of insurance, the seller has no
obligation, however the seller
could assist the buyer at its
request and expense.
For the delivery to be effected
the seller must place the goods
on board the vessel nominated
by the buyer at the loading point.
The seller bears all risks of loss
of or damage to the goods until it
has been delivered.
As for the allocation of costs,
the seller must pay all costs until
the goods have been delivered,
and, where applicable, costs
of customs formalities. The
seller must, at the buyer’s risk
and expense, give notice to the
buyer that the goods have been
delivered. The seller must, at its
own expense, provide the buyer
with proof that the goods have
been delivered.
With respect to the checking,
packaging, marking, the seller
must pay those costs that are
necessary for the purpose of
the delivery of the goods, as
well as the costs of any preshipment
inspection mandated
by the authority in the country
of origin.
As for the assistance with
information (including securityrelated
information) and related
costs, the buyer could request
such from the seller, but this
would be for the buyer’s risk and
account.
In next week’s issue we will
define Free on Board (FOB) –
The Buyer’s Obligations.