Purchasing


Carrollton-Farmers Branch Independent School District
    1505 Randolph Street
    Carrollton, TX 75006
    Phone: (972) 968-6330
    Fax: (972) 968-6337



FOB Definition/ Shipping Terms of Sale

FOB, Free On Board, is a transportation term that indicates that the price for goods includes delivery at the Seller's expense to a specified point and no further. The FOB term is used with an identified physical location to determine 1) the responsibility and basis for payment of freight charges, and 2) the point at which title for the shipment passes from Seller to Buyer.

The FOB location terms, Origin and Destination, may be qualified by modifiers. The modifier determines the payment of the transportation charges. Modifiers denote nothing about the title of the goods or filing of claims. The three most common modifiers are: Collect, Prepaid & Add, and Prepaid & Allow.


Collect The carrier collects the transportation charges from the Buyer.
Prepaid & Add The Seller prepays the transportation charges, but adds the charges to the invoice for reimbursement from the Buyer.
Prepaid & Allow The Seller prepays the transportation charges and they are already included in the contract price.




TITLE & CONTROL OF GOODS

PAYMENT TERM VARIATIONS

POINT OF ORIGIN
 
FOB Origin Unless qualified in the FOB clause, the buyer is responsible for freight charges.
FOB Origin, Freight Collect Buyer pays and bears freight charges.
FOB Origin, Freight Prepaid Seller pays and bears freight charges.
FOB Origin, Freight Prepaid & Add Seller pays and invoices Buyer for freight charges.
 
DESTINATION
 
FOB Destination Unless qualified in the FOB clause, the Seller is responsible for freight charges.
FOB Destination, Freight Collect Buyer pays and bears the freight charges.
FOB Destination, Freight Prepaid Seller pays and bears the freight charges.
FOB Destination, Freight Collect & Allowed Buyer pays freight charges and deducts the amount from Seller's invoice.
FOB Destination, Freight Prepaid & Add Seller pays the freight and adds the freight charges to its invoice to the Buyer.
 

    SHIPPING DEFINITIONS

    Freight Terms identify the party responsible for the payment of freight and are usually expressed as: prepaid or collect with the following nuances: prepaid to a stated location and collect beyond or third party or pre-pay and add. While there are other subtleties, these examples will suffice.

    Prepaid means that the shipper owns the freight payment responsibility.

    Collect means that the consignee owns the freight payment responsibility.

    Prepaid/Collect Beyond means that the shipper or consignor owns the prepayment portion with the balance of the freight charge being the responsibility of the consignee.

    Third Party establishes that a party neither the consignor nor consignee owns the payment processing function. The legal payment obligation may or may not belong to the third party and the assignment of the legal responsibility is determined from the parties identified on the Bill of Lading Contract. Simply put, unless the payment party is a party to the Bill of Lading contract, they have no legal obligation for payment. "Third Party" is typically invoked when there is an outsourced payment service to handle the freight payment function.

    Pre-pay and Add typically means that the shipper advances the freight charges to the carrier and then bills the beneficial owner of the freight for an amount approximating or equal to the actual freight charges.

    Terms of Sale/Purchase identify the passage of title and are typically expressed as "FOB, stated point or place". In their most simple and usual expression they appear as FOB Origin or FOB destination.

    FOB Origin means that title to the merchandise passes at time and place of pick-up.
    FOB Destination means that title to the merchandise passes at time and place of delivery.

 

QUICK REFERENCE/MEANING OF THE TERMS OF SALE

FOB Origin FOB Destination
    Buyer Pays freight charges     Seller Pays freight charges
    Buyer Bears freight charges     Seller Bears freight charges
    Buyer Owns goods in transit     Seller Owns goods in transit
    Buyer Files claims (if any)     Seller Files claims (if any)
FOB Origin, Freight Collect FOB Destination, Freight Collect
    Buyer Pays freight charges     Buyer Pays freight charges
    Buyer Bears freight charges     Buyer Bears freight charges
    Buyer Owns goods in transit     Seller Owns goods in transit
    Buyer Files claims (if any)     Seller Files claims (if any)
FOB Origin, Freight Prepaid FOB Destination, Freight Collect & Allow
    Seller Pays freight charges     Buyer Pays freight charges
    Seller Bears freight charges     Seller Bears freight charges
    Buyer Owns goods in transit     Seller Owns goods in transit
    Buyer Files claims (if any)     Seller Files claims (if any)
FOB Origin, Freight Prepaid & Add FOB Destination, Freight Prepaid
    Seller Pays freight charges     Seller Pays freight charges
    Buyer Bears freight charges     Seller Bears freight charges
    Buyer Owns goods in transit     Seller Owns goods in transit
    Buyer Files claims (if any)     Seller Files claims (if any)

Purchasing
Office Hours:

08:00 AM to 04:45 PM
(CST)
Monday through Friday
(Excluding District Holidays)

TASBO 2015
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