Under FOB shipping terms, when does title transfer?

Under FOB shipping terms, when does title transfer?

• A. When the goods leave the seller's warehouse
• B. When the goods are delivered to the buyer's loading dock
• C. When the seller manufactures the goods
• D. Upon payment of the invoice

Answer: (A)

FOB shipping terms set when ownership and risk pass from seller to buyer. Under FOB shipping point, the transfer occurs the moment the goods are placed on the carrier and leave the seller’s premises. That moment marks both title and risk shifting to the buyer, so the buyer owns the goods and bears transit risk from that point forward. The other moments listed don’t reflect this transfer rule: title isn’t tied to delivery at the buyer’s loading dock (that would be FOB destination), nor to manufacture completion, nor to payment.

FOB shipping terms set when ownership and risk pass from seller to buyer. Under FOB shipping point, the transfer occurs the moment the goods are placed on the carrier and leave the seller’s premises. That moment marks both title and risk shifting to the buyer, so the buyer owns the goods and bears transit risk from that point forward. The other moments listed don’t reflect this transfer rule: title isn’t tied to delivery at the buyer’s loading dock (that would be FOB destination), nor to manufacture completion, nor to payment.