An Incoterms rule: the seller clears the goods for export and loads them on the vessel at the named port of shipment, for example FOB Ningbo.
Under Incoterms 2020, risk passes to you once the goods are on board the vessel. Incoterms are contract terms, so they apply only if your contract says so, for example “FOB Ningbo, Incoterms 2020”.
FOB tells you who carries the goods and the risk. It says nothing about quality. Loading the goods is not acceptance, so the contract still needs an inspection step and a time limit for you to raise defects after arrival.
Where FOB contracts slip
A common situation: the contract says only “FOB”, with no port and no Incoterms version. The factory then delivers late to a port the buyer did not plan for, or loads goods nobody has inspected. Absent agreement, the Civil Code passes risk on delivery (art. 604). Writing “FOB [port], Incoterms 2020” fixes that delivery point at the vessel in a named port.
FOB also decides who books the ship: normally the buyer’s forwarder. A factory that misses the cut-off costs you a sailing, so if timing matters, tie the delivery date to loading on the vessel your forwarder names and set liquidated damages per day of delay.
Delivery clause
A delivery clause that keeps risk and quality apart:
“Delivery: FOB [Ningbo], Incoterms 2020, on the vessel nominated by the Buyer’s forwarder, no later than [date]. Loading is not acceptance. The Buyer may notify defects in quantity or quality within [60] days after the goods arrive at the port of destination.”
Watch that notice period. Where the contract sets one and you do not notify defects within it, the goods are deemed to conform (Civil Code art. 621).
Related terms
Read next
- When Production Doesn't Match the Golden Sample, a Chinese Court Asks First Whether It Was Sealed
- Chinese Supplier Breached the Contract: What Can a Foreign Buyer Do?
Sources
- Civil Code of the PRC (effective 1 January 2021), articles 604 and 621, full text on the Ministry of Justice site ↗
- ICC, Incoterms 2020
- Translations are mine and unofficial.
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