If goods in transit are shipped FOB shipping point by a carrier named by the buyer,
the seller has legal title to the goods until they are delivered.
the buyer has legal title to the goods when a public carrier accepts the goods from the seller.
the seller is responsible for paying the shipping charges.
Ono one has legal title to the goods until they are delivered.
The Correct Answer and Explanation is :
The correct answer is:
The buyer has legal title to the goods when a public carrier accepts the goods from the seller.
Explanation:
When goods are shipped under FOB (Free on Board) shipping point, the ownership (legal title) of the goods transfers from the seller to the buyer as soon as the goods are handed over to the carrier at the seller’s location. This means that from the moment the carrier accepts the goods, the buyer is responsible for any risks, such as damage or loss, during transit.
Here’s a breakdown of why this is the correct answer:
- Definition of FOB Shipping Point:
- “FOB” stands for Free on Board, which is a shipping term that determines when ownership and responsibility for goods shift from the seller to the buyer.
- “Shipping point” means that the transfer of title and risk occurs at the seller’s location when the goods are shipped.
- Legal Title Transfer:
- Under FOB shipping point terms, the legal ownership passes to the buyer when the goods are placed on the carrier.
- The seller is no longer responsible once the carrier accepts the shipment.
- Incorrect Answer Explanations:
- “The seller has legal title to the goods until they are delivered.”
❌ Incorrect: The seller does not retain ownership once the goods leave their premises. - “The seller is responsible for paying the shipping charges.”
❌ Incorrect: Under FOB shipping point, the buyer pays for transportation unless otherwise agreed. - “No one has legal title to the goods until they are delivered.”
❌ Incorrect: Legal title cannot be “in limbo”; it transfers immediately to the buyer upon shipment.
Thus, under FOB shipping point terms, the buyer takes ownership and assumes all risks when the goods are handed over to the carrier.