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 most three 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