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F.O.B (freight on board) contracts

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Case Scenario: Grocery, INC.

Scenario: Grocery, Inc., is a retail grocery store chain based in Any State, U.S.A. Grocery has stores throughout the United States. Grocery has written contracts with many different vendors to purchase the products they sell in their stores. Vendors range from individuals to international corporations. Tom Green works as the produce manager for the store in My Town, U.S.A. Jeff Fresh, 17 years old, is spending his summer vacation working for Tom in the produce department.

Using the scenario above, give a detailed answer to the following question:

Organic Farms shipped a truckload of peaches to Grocery using an independent trucker. In route, the truck broke down and the shipment was delayed three days. The peaches were spoiled when they arrived. The terms of the contract were F.O.B. Who bears the risk? Explain your answer.

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F.O.B (freight on board) contracts are debated.

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F.O.B (freight on board) contracts indicate that the supplier pays the shipping costs and is liable for freight risks and related costs until the "specified point". In this contract the ...

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Umut Oltulu, MBA
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  • MBA, Texas A&M University-Kingsville
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