The PI says FOB Shanghai. Buyers hear: once it is on the ship, it is mine. Factories hear: until you pay the balance, it is still ours. Both can be half right. Incoterms allocate risk and cost at a place. They do not, by themselves, say who holds title — who owns the goods if the buyer goes quiet, the factory goes bust, or a creditor appears at the warehouse.
This piece is the ownership line, not another Incoterms explainer.
1. Write when title passes
Pick one event and print it:
- when the balance is received in the seller’s named account, or
- when the goods are handed over under the Incoterm, or
- when documents are tendered and accepted
If you write nothing, each side will pick the event that helps them. A factory that has not been paid will say title never moved. A buyer who has paid a deposit will say they already own the work-in-progress. Those are different claims.
2. Deposit and tooling are not automatic title
Money down on production does not make you the owner of unfinished parts, and a tooling charge does not make you the owner of the mold unless the tooling clause says so. Keep title of goods, title of molds, and risk of loss on three separate sentences. Mixing them is how a deposit is later described as “purchase of the mold” or “purchase of the steel.”
3. Why this shows up in real fights
Goods ready but unpaid, sitting in their warehouse: if title has not passed, they may refuse release or claim a lien. Goods on the water, balance unpaid: the B/L may still be to their order. Goods paid, still in their yard: you need the PI to say they are holding your property, not their inventory. None of these is solved by repeating “FOB.”
4. Keep the line short enough to sign
A one-sentence title clause plus the Incoterm you already use is enough on a short PI. Do not paste a four-page retention-of-title schedule from a European template onto a first order unless counsel has fitted it to the place the goods actually sit. An unread paragraph will be ignored; a dated one-liner is harder to shrug off.
The bottom line
FOB tells you where risk and freight sit. Title tells you who owns the cartons and the tool. Write both. If you only wrote the Incoterm, you wrote the journey, not the owner.
If you need the title-transfer line written into the PI in English and Chinese, I can prepare the clause and issue a stamped set under our bilingual translation company seal when you need one. See what this covers.
When title passes is a legal question under the governing law and may not follow the Incoterm. This article is general sourcing guidance, not legal advice.