Final answer:
FOB Factory means that the seller is responsible for the goods until they are loaded onto the transportation at the factory, after which the responsibility shifts to the buyer.
Step-by-step explanation:
FOB stands for Free on Board. When the terms on a purchase order indicate FOB Factory, it means that the seller is responsible for the goods until they are loaded onto the transportation at the factory.
Once the goods are loaded onto the transportation, the responsibility for the goods shifts to the buyer. This means that any damages or loss that may occur during transportation from the factory to the buyer's location are the buyer's responsibility.
For example, if a company purchases goods with FOB Factory terms and the goods get damaged during transit, the buyer would need to file a claim with the transportation company for compensation.