In a free on board contract, what does the buyer receive upon shipment?

In a free on board (FOB) contract, the key characteristic is that the buyer takes ownership and becomes responsible for the goods as soon as they are shipped. This is fundamentally tied to the term "free on board," which signifies that the seller is responsible for the goods only until they are loaded onto the shipping vessel. As soon as the goods are loaded, the title transfers to the buyer, who assumes all risks and responsibilities for the goods right from that moment.

This immediate transfer of title upon shipment is essential for the buyer, as it ensures that they have legal ownership of the goods as they enter the shipping process. The buyer's ownership allows them to secure financing, assume insurance responsibilities, and manage risk from that point forward.

In contrast, options that state the buyer receives title after payment or upon the goods' arrival do not align with the principles of an FOB contract. Similarly, the idea that title could be granted before shipment contradicts the definition of FOB, as the essence of the agreement relies on the transfer occurring upon shipment, not prior. Therefore, the buyer indeed receives title to the goods immediately once they are shipped.