In a FOB origin contract, when does the risk of loss transfer to the Government?

In an FOB (Free On Board) origin contract, the risk of loss transfers to the Government upon delivery to the carrier. This means that once the seller hands over the goods to the transportation provider for shipment, the responsibility for any potential loss or damage shifts to the buyer, in this case, the Government.

This transfer of risk is significant because it establishes that the seller's obligation ends at the moment the goods are entrusted to the carrier, which is typically considered the point at which the Government assumes responsibility for the shipment. This contractual term is commonly used in shipping agreements and clearly delineates when liability for the goods changes hands.

In contrast, formal acceptance and invoice approval relate more to the administrative aspects of a contract rather than the physical risk associated with the goods. Likewise, arrival at the destination would signify the completion of the delivery process, but not the transfer of risk, which occurs earlier in the shipment process upon delivery to the carrier. Understanding this distinction is crucial for managing contracts and assessing liabilities in supply chain operations effectively.