The terms of sale used for transactions within the United States have wide spread recognition, however, these terms are not defined in a single source. “F.O.B. Origin” and “F.O.B. Destination” are defined in Section 336.2-319 of the Uniform Commercial Code (UCC). “Collect” and “Prepaid” are defined in Item 110 of the National Motor Freight Classification (NMFC). The other modifiers are industry slang with no authoritative basis. Thus, it is very important when using these modifiers to make sure that both parties are using them in the same way.
Term of Sale | Party Paying Freight Charges to Carrier | Risk of Loss Passes to Buyer |
1. F.O.B. Origin | Buyer | When goods are delivered to carrier. |
2. F.O.B. Origin, Freight Collect | Buyer | When goods are delivered to carrier. |
3. F.O.B. Origin, Freight Prepaid | Seller | When goods are delivered to carrier. |
4. F.O.B. Origin, Freight Prepaid & Charged Back or F.O.B. Origin, Freight Prepaid & Add | Paid for by seller, but added to the seller’s invoice to the buyer. | When goods are delivered to carrier. |
5. F.O.B. Destination | Seller | Completion of delivery by carrier. |
6. F.O.B. Destination, Freight Collect | Buyer | Completion of delivery by carrier. |
7. F.O.B. Destination, Freight Prepaid | Seller | Completion of delivery by carrier. |
8. F.O.B. Destination, Freight Collect & Allowed | Buyer, but deducted from the seller’s invoice by the buyer. | Completion of delivery by carrier. |
9. F.O.B. Destination, Freight Prepaid & Add | Seller, but added to the seller’s invoice to the buyer. | Completion of delivery by carrier. |
Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A., the Senior Editor of transportlawtexts, inc., and Director of Virtual Education for the Transportation and Logistics Council, Inc.
Previous columns, including those of Andrew M. Danas, may be found in the “Content Library” on the PARCEL website.
This article originally appeared in the March/April, 2026 issue.
