The Bank of the Elena on Request of Don Research Paper

The Bank of the Elena on Request of Don - Research Paper Example Being one of the popular and important international commercial terms, ‘FOB’ is used very widely in international commercial transactions. ‘FOB’ is one of the F group terms denotes ‘Free on Board’ where the element of freight is undertaken to be paid by the buyer and the risk on the goods is deemed to pass to the buyer at the point where the goods are delivered to the specified carrier. The term FOB was originally developed with an intention to specify the responsibilities and liabilities of the parties under the contract. In the case of Pyrene v, Scindia three different variations of the FOB Contracts have been established. As a consequence in a FOB contract if the buyer fails to advise his nomination of a specific vessel within the time stipulated under the contract can be terminated by the seller. With this repudiation of the contract, the seller reserves the right to sell the goods to any other third party and also to recover any resultant l oss from the buyer. FOB is being used as one of the important commercial terms for the past two centuries and because of the familiarity traders do not wish to use other terms while formulating the sales contracts. However, this has resulted in using the term FOB wrongly as FOB Factory or FOB Plant which is an incorrect usage as stated by the International Chamber of Commerce According to the Chamber the term implies only ‘Free on Board’. Thus under the FOB contract, the seller need only to place the goods on board the ship which is nominated by the buyer. However as specified in Para B7 of Incoterms 2000, the buyer is obligated to give the seller sufficient notice of the vessel he has nominated.