The domestic one
UCC § 2-319, quoted above. It governs a sale of goods between US parties and applies to any mode — parcel, LTL, truckload, air. This is almost certainly the one meant when a US purchase order says FOB.
Shipping terms and who owes the money
Who pays for shipping on FOB?
FOB origin, the buyer pays. FOB destination, the seller pays. The two-word difference after “FOB” is the whole answer, and it is written into US commercial law rather than into any carrier's policy. Below is the statutory wording itself, the trap that catches importers, and what the term does to a damage claim.
UCC 2-319 quotedIncoterms trap explainedRisk and freight together
The term names a place, and the place names the payer
Whoever owns the goods on the road pays for the road.
The answer, in the words of the statute
US domestic sales run on the Uniform Commercial Code, and § 2-319 defines the F.O.B. term directly. It is short, and it settles the question without interpretation.
F.O.B. place of shipment. “the seller must at that place ship the goods in the manner provided in this Article (Section 2-504) and bear the expense and risk of putting them into the possession of the carrier.”
F.O.B. place of destination. “the seller must at his own expense and risk transport the goods to that place and tender delivery of them in the manner provided in this Article (Section 2-503).”
Read the two side by side and the rule falls out. Under a shipment term the seller's spending stops at the carrier's tailgate; the transport itself belongs to the buyer. Under a destination term the seller funds the whole journey. Nothing else in the sentence is doing any work — the payer is decided by which place the contract named.
Which side owes what
| Contract says | Who pays the freight | Who carries risk in transit | Who files the damage claim |
|---|---|---|---|
| FOB origin, or FOB shipping point | Buyer | Buyer, from the moment the carrier takes possession | Buyer |
| FOB destination | Seller | Seller, until tender of delivery at the named place | Seller |
| FOB origin, freight prepaid | Seller pays the carrier's invoice | Buyer still carries the transit risk | Buyer |
| FOB destination, freight collect | Buyer is billed by the carrier | Seller still carries the transit risk | Seller |
The bottom two rows are the ones that cause arguments. A freight-prepaid or freight-collect instruction says who receives the carrier's bill; the FOB point says where title and risk change hands. They are written in the same line of a purchase order and they answer different questions, so read both before deciding who owes whom.
The trap: there are two different FOBs
Half of all FOB disputes are two people using the same three letters for two different rules.
The international one
Incoterms® FOB, published by the ICC. The International Trade Administration lists it as one of four rules reserved for sea and inland waterway transport, with FAS, CFR and CIF. Under it the seller delivers on board a named vessel.
Why it matters
An air or truck shipment quoted “FOB” under Incoterms is using a rule written for a ship's rail. The ICC's own guidance for non-sea movements points to FCA instead. If your goods never touch a vessel, the Incoterm is the wrong instrument.
Practical test: if both parties are in the United States and the goods move by truck or parcel, you are in UCC territory and the table above is your answer. If there is an ocean leg and a named port of loading, you are in Incoterms territory, and the term should say so — “FOB Long Beach, Incoterms® 2020” rather than a bare FOB.
What this means when you are the one buying the label
The FOB term decides which party goes and buys transportation. If you are a buyer under FOB origin, the freight is yours to arrange and yours to pay, and the seller's job ends at handing the cartons to whoever you sent. If you are a seller under FOB destination, you are buying the label and eating the surcharge if the box is heavier than you declared.
Either way the practical next step is the same: price the leg you actually owe before you agree to the term, not after. A pallet moving 400 miles and a 30 lb carton moving the same lane are not the same money, and an FOB term signed without that number is a term signed blind.
Where these rules come from
- Uniform Commercial Code § 2-319, F.O.B. and F.A.S. Terms, at Cornell Legal Information Institute. Read 2026-08-17. Both quotations above are the statutory wording.
- International Trade Administration, Know Your Incoterms. Read 2026-08-17. Source for FOB being one of four Incoterms rules for sea and inland waterway transport only.
- International Chamber of Commerce, Incoterms® 2020. The full rule text is a paid ICC publication; this page quotes only the free government summary of which rules apply to which transport mode.
This page explains a commercial term; it is not legal advice. The UCC is adopted state by state and a particular contract can define its own FOB point that overrides the default. When real money turns on the answer, read the contract and ask a lawyer, not a shipping site.
Common questions
Who pays for shipping on FOB origin?
The buyer. Under UCC § 2-319 the seller must bear the expense and risk of putting the goods into the carrier's possession — and no further. Everything after that, freight charge included, is the buyer's unless a separate freight-prepaid term says otherwise.
Who pays for shipping on FOB destination?
The seller. The statute says the seller must at his own expense and risk transport the goods to that place and tender delivery. Freight and transit risk both stay with the seller until the goods arrive.
Is this the same as the Incoterms FOB?
No. The International Trade Administration lists Incoterms FOB among four rules reserved for sea and inland waterway transport. A domestic truck or parcel sale is using the UCC term instead, which is a different instrument with different wording.
Does FOB decide payment or risk?
Both, in the same sentence. The statute allocates “expense and risk” together, which is why the FOB point also decides who files the claim when a shipment arrives damaged.
What about freight prepaid and freight collect?
They say who gets the carrier's invoice and can be written against either FOB point. “FOB origin, freight prepaid” means risk passed at the dock but the seller still pays the bill. Read both terms; they answer different questions.
Can a contract override the default?
Yes. The UCC supplies a default meaning; two parties are free to define the FOB point and the freight allocation explicitly in their agreement. Where the contract is specific, the contract wins.