What are the terms of Sale for Domestic Transportation in the U.S.?

Answer 1

The following are a few "Terms of Sale" that are typically used in the United States for domestic commercial transactions. The term "FOB", as used below, is based on US domestic trade terms governed by the Uniform Commercial Code (a body of law in the US). It should not be confused with the "INCO term" FOB which carries a different meaning (based on an agreement adopted by the International Chamber of Commerce for use in international trade).
When considering any business transaction that will require interstate freight transportation, it is important to note that (in accordance with the Uniform Commercial Code) when specific terms of sale are not otherwise agreed upon, the default term of sale is FOB Origin, freight collect.

FOB Origin, freight allowed

FOB Origin, freight allowed

Title passes to the buyer at the moment the goods are transferred to the carrier. In the event of loss or damage in transit, the buyer must file claim (as the beneficial owner of the property). Freight will be paid by the seller and the cost of freight has already been figured into the cost of goods (freight is never really "free", the cost of freight is always included somewhere).



Seller pays freight charges

Buyer owns goods in transit

Buyer files freight claims








FOB Origin, prepay & add


Title passes to the buyer at the moment the goods are transferred to the carrier. In the event of loss or damage in transit, the buyer must file claim (as the beneficial owner of the property). Freight will be paid by the seller, but the cost of the freight will be added to the invoice for the sale of the goods.



Seller pays freight charges

Seller adds a freight charge to invoice

Buyer owns goods in transit

Buyer files freight claims




FOB Origin, freight collect
Title passes to the buyer at the moment the goods are transferred to the carrier. In the event of loss or damage in transit, the buyer must file claim (as the beneficial owner of the property). Buyer will be invoiced by the carrier for the freight charges. When no other terms are agreed upon, FOB Origin, freight collect is applicable by default.



Buyer pays freight charges

Buyer owns goods in transit

Buyer files freight claims






FOB Destination, freight allowed
Title passes to the buyer when freight reaches its destination. In the event of loss or damage in transit, the seller must file claim (as the beneficial owner of the property). Freight will be paid by the seller and the cost of freight is figured into the cost of goods.



Seller pays freight charges

Seller owns goods in transit

Seller files freight claims












FOB Destination, prepay freight & add
Title passes to the buyer when freight reaches its destination. In the event of loss or damage in transit, the seller must file claim (as the beneficial owner of the property). Freight will be paid by the seller, but the cost of the freight will be added to the invoice for the sale of goods.



Seller pays freight charges

Seller adds a freight charge to invoice

Seller owns goods in transit

Seller files freight claims



FOB Destination, freight collect
Title passes to the buyer when freight reaches its destination. In the event of loss or damage in transit, the seller must file claim (as the beneficial owner of the property). Buyer will be invoiced by the carrier for the freight charges, or collect payment for freight charges upon delivery. Should not be confused with "COD", or "collect on delivery" which would require payment for the merchandise itself before delivery to the buyer.



Buyer pays freight charges

Seller owns goods in transit

Seller files freight claims

Answer 2

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Answer 3

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