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FOUNDAMENTAL OF BUSINESS LAW TODAY- Chapter 14
1. The seller is in New York and the buyer is in Philadelphia. The 3rd party carrier shipping contract reads F. O. B. Philadelphia. What type of contract is this and who bears the risk of loss?
Free On Board (FOB) is a part of purchase contract where the shipping cost is borne by the supplier from the production point to destination point and the responsibility is taken by the buyer at the destination point. There are two types of FOB contract. They are:
· FOB destination
· FOB Origin
In this scenario, this is a FOB destination contract where the buyer destination is Philadelphia. The risk is borne by the seller up to the time of delivery.
2. What if the contract in Question 1, read F.O.B., New York? What type of contract would that be and who would bear the risk of loss?
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