Free On Board (FOB)

Last Updated: Jun 7, 2019

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The initials FOB stand for either "free on board" or "freight on board." Either way, it has the same definition. When using the term in business, buyers and sellers attach FOB to the beginning of a location to show the point at which freight changes hands from seller to buyer.  In a simple FOB origin arrangement, the seller agrees to pay all expenses related to the transportation of the freight to a specific point. Once the freight reaches that point, the seller's responsibility ends, and the freight becomes the property and responsibility of the buyer.