Free on Board (FOB) Terminology

Free on Board (FOB) - without charge for delivery to and placing on board a carrier at a specified point; determines the point at which title for shipment passes from vendor to purchaser. [NIGP]

State and University policy allows only FOB Destination terms.

The table below shows the terms of sale defining who pays freight charges and when title passes to the buyer for the two (2) freight terms which are in accordance with State and University policy.

Freight Terms Ownership of Commodity Payment of Freight Charges Freight Claims

FOB Destination: Prepaid

Title passes to University when product is delivered in good condition Vendor pays shipping costs Vendor files any freight claims, replaces damaged merchandise, no additional cost to university

FOB Destination: Prepaid & Added

Same Vendor pays shipping costs and adds it to University invoice Same

State and university policies do not allow any Freight Collect or FOB Origin (or Shipping Point) terms.

Resources

Forms

Memos

A-Z Index

FAQ