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 supplier 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 Supplier pays shipping costs Supplier files any freight claims, replaces damaged merchandise, no additional cost to university
FOB Destination: Prepaid & Added Same Supplier 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.

Rev 5/07/21




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