Freight Term

** Free on Board (F.O.B) means the goods will be placed in a mode of transport without any loading cost and free of any encumbrances.

F.O.B. Destination Point or F.O.B. Origin or Shipping Point

- Destination -- Title or ownership passes to the buyer when the carrier delivers the goods to the delivery point specified by the buyer.

- Origin -- Title or ownership passes to the buyer at the shipping point when the carrier accepts the goods for transport. The shipping point is usually the vendor's factory or warehouse.

Establishing ownership will fix responsibility for the goods and is important in handling claims that may result from accidents occuring before, during or after transport.

After ownership is established, the last section of the freight term establishes payment terms.

Freight Prepaid & Allowed -- Vendor pays the freight and buyer will not be billed
Freight Prepaid & Charged -- Vendor pays the freight and in turn bills the buyer
Freight Collect -- Upon delivery, the buyer is billed by or pays the carrier for freight

** Cost, Insurance and Freight (C.I.F)
A trade term requiring the seller to arrange for the carriage of goods by sea to a port of destination, and provide the buyer with the documents necessary to obtain the goods from the carrier.

Contracts involving international transportation often contain abbreviated trade terms that describe matters such as the time and place of delivery, payment, when the risk of loss shifts from the seller to the buyer and who pays the costs of freight and insurance. The most commonly known trade terms are Incoterms, published by the International Chamber of Commerce (ICC). These are often identical in form to domestic terms (such as the American Uniform Commercial Code), but have different meanings. As a result, parties to a contract must expressly indicate the governing law of their terms.

It's important to realize that because this is a legal term, its exact definition is much more complicated and differs by country. Contact an international trade lawyer before using any trade term.

** Cost and Freight (C.F.R)
A trade term requiring the seller to arrange for the carriage of goods by sea to a port of destination, and provide the buyer with the documents necessary to obtain the goods from the carrier. Under CFR, the seller does not have to procure marine insurance against the risk of loss or damage to the goods during transit.

Contracts involving international transportation often contain abbreviated trade terms that describe matters such as the time and place of delivery, payment when the risk of loss shifts from the seller to the buyer, and who pays the costs of freight and insurance.

The most commonly known trade terms are Incoterms, which are published by the International Chamber of Commerce (ICC). These are often identical in form to domestic terms (such as the American Uniform Commercial Code), but have different meanings. As a result, parties to a contract must expressly indicate the governing law of their terms.

It's important to realize that because this is a legal term, its exact definition is much more complicated and differs by country. It is suggested that you contact an international trade lawyer before using any trade term.

** Ex Works (E.X.W)
A trade term requiring the seller to deliver goods at his or her own place of business. All other transportation costs and risks are assumed by the buyer.

Contracts involving international transportation often contain abbreviated trade terms that outline matters such as the time and place of delivery and payment, the time when the risk of loss shifts from the seller to the buyer, and the party who pays the costs of freight and insurance.

The most commonly known trade terms are Incoterms, which are published by the International Chamber of Commerce. These are often identical in form to domestic terms, such as the American Uniform Commercial Code, but have different meanings. As a result, parties to a contract must expressly indicate the governing law of their terms.

It's important to realize that because this is a legal term, its exact definition is complicated and differs by country. It is suggested that you contact an international trade lawyer before using any trade term.

** Free Alongside (F.A.S)
A trade term requiring the seller to deliver goods to a named port alongside a vessel designated by the buyer. "Alongside" means that the goods are within reach of a ship's lifting tackle.

When used in trade terms, the word "free" means the seller has an obligation to deliver goods to a named place for transfer to a carrier.

Contracts involving international transportation often contain abbreviated trade terms that describe matters such as the time and place of delivery and payment, when the risk of loss shifts from the seller to the buyer, and who pays the costs of freight and insurance.

The most commonly known trade terms are Incoterms, which are published by the International Chamber of Commerce (ICC). These are often identical in form to domestic terms, such as the American Uniform Commercial Code, but have different meanings. As a result, parties to a contract must expressly indicate the governing law of their terms.

It's important to realize that because this is a legal term, its exact definition is much more complicated and differs by country. It is suggested that you contact an international trade lawyer before using any trade term.

** Free Carrier (F.C.A)
A trade term requiring the seller to deliver goods to a named airport, terminal, or other place where the carrier operates. Costs for transportation and risk of loss transfer to the buyer after delivery to the carrier.

When used in trade terms, the word "free" means the seller has an obligation to deliver goods to a named place for transfer to a carrier.

Contracts involving international transportation often contain abbreviated trade terms that describe matters such as the time and place of delivery and payment, when the risk of loss shifts from the seller to the buyer, and who pays the costs of freight and insurance.

The most commonly known trade terms are Incoterms, which are published by the International Chamber of Commerce (ICC). These are often identical in form to domestic terms, such as the American Uniform Commercial Code, but have different meanings. As a result, parties to a contract must expressly indicate the governing law of their terms.

It's important to realize that because this is a legal term, its exact definition is much more complicated and differs by country. It is recommened that you contact an international trade lawyer before using any trade term.