In a free on board contract, when does the buyer assume the risk?

In a free on board (FOB) contract, the buyer assumes the risk at the moment the seller delivers the goods to the carrier. This principle is fundamental to understanding the FOB shipping terms, which clarify when the responsibility for the goods transfers from seller to buyer.

Under FOB terms, as soon as the seller has handed over the goods to the carrier, the risk of loss or damage shifts to the buyer. This means that if any issues arise during transportation, the buyer bears the responsibility for those losses or damages. The rationale behind this is tied to the nature of the shipping contract; once the seller fulfills their obligation of delivering the goods to the designated carrier, their responsibility effectively ends, and it becomes the buyer's responsibility to manage the goods from that point onward.

In contrast, the other scenarios outlined do not represent the point at which the risk transfers according to FOB terms. Payment for the goods or their receipt by the buyer occurs subsequently to the transfer of risk, while placing an order doesn't constitute the delivery of goods to a carrier, which is the key moment that defines risk assumption in this context. Therefore, understanding the mechanics of FOB agreements is essential for managing the risk associated with shipping and transport in a contractual situation.