Los Angeles Claims Adjuster Property and Causality Practice Exam

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When does the seller's responsibility end in a "Free on Board Destination" contract?

Once the goods leave the seller's location
When the goods reach the shipping dock
When the goods are delivered to the buyer
At the point of sale

The correct answer is: When the goods are delivered to the buyer

In a "Free on Board (FOB) Destination" contract, the seller's responsibility for the goods continues until they are delivered to the buyer's specified destination. This means that the seller retains ownership and responsibility for the goods while they are in transit and until they reach the location designated by the buyer. The seller is accountable for any risks or damages that occur during transportation, which includes covering shipping costs and ensuring that the goods arrive in the agreed-upon condition. This understanding highlights the nature of FOB Destination agreements, emphasizing the seller's obligation to ensure safe delivery to the buyer rather than transferring responsibility at an earlier point, such as when the goods leave the seller's location or reach the shipping dock. The point of sale does not terminate the seller's responsibility in this context; it occurs only once the goods have arrived successfully at the buyer's location.