FOB definition including break down of areas in the definition. Analyzing the definition of key term often provides more insight about concepts. FOB can be defined as: Abbreviation for free on board; the point when ownership of goods passes to the buyer; FOB shipping point (or factory) means the buyer pays shipping costs and accepts ownership of goods when the seller transfers goods to the carrier; FOB destination means the seller pays shipping costs and the buyer accepts ownership of goods at the buyer’s place of business. FOB shipping point and FOB destination are important terms to know, terms that show up on many test questions and in practice the difference between FOB shipping point and FOB destination can have big implications.
