Who is responsible for recovering loss during shipment if the terms on the Bill of Lading are FOB Factory?

Prepare for the Associate Contractors License Exam. Study using flashcards and multiple choice questions, each question is equipped with hints and explanations. Get exam-ready today!

When the terms on the Bill of Lading specify FOB (Free on Board) Factory, it means that the responsibility for the goods shifts from the seller (vendor or manufacturer) to the buyer (purchaser) once the goods are loaded onto the shipping vehicle at the factory. Therefore, the purchaser assumes responsibility for the product during transportation, including any loss or damage that may occur while the goods are in transit.

This arrangement places the risk on the purchaser because they are now responsible for handling any issues that arise after the goods leave the factory. It is important for purchasers to consider this when evaluating shipping terms, as they will need to arrange for insurance or other protective measures during transit.

In contrast, the vendor, carrier, or manufacturer does not bear the risk for any loss during shipment under these terms, as their obligation ends once the goods are transferred to the carrier at the factory.

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