Exam L4M4 Topic 1 Question 242 Discussion

Actual exam question for CIPS's L4M4 exam
Question #: 242
Topic #: 1

Incoterms are designed to be understood and interpreted on a worldwide basis. What is the interpretation for FOB (Free on Board)?

A. The buyer takes responsibility for the goods after they are loaded on the ship, plus all subsequent costs including freight charges B. The buyer takes responsibility for taking the goods from the departure quayside to the ship, plus all subsequent costs C. The buyer takes responsibility for the goods after they are loaded on the ship, plus subsequent costs excluding freight charges D. The buyer takes responsibility for transferring the goods from the seller's premises to the ship, plus all subsequent costs

Suggested Answer: A Vote an answer

Under theFOB (Free on Board)Incoterm, the seller is responsible for delivering the goods onto the vessel at the named port of shipment. Once the goods are on board, the risk and responsibility transfer to the buyer.
From that point onward, the buyer assumes all costs and risks associated with the transportation of the goods, including freight charges, insurance, unloading, and delivery to the final destination.
This interpretation aligns with the Incoterms® 2020 rules set by the International Chamber of Commerce (ICC). It's crucial to note that FOB is applicable only for sea or inland waterway transport and is not suitable for containerized cargo, where theFCA (Free Carrier)term is more appropriate.
References:
Trade Finance Global: FOB (Free on Board) - Incoterms® 2020 Rule
Maersk: FOB Incoterms® meaning | Free on Board shipping

by Cheryl at Sep 12, 2026, 08:33 AM

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