Shipment Contracts

In a shipment contract, the seller‘s obligation is to send the goods to the buyer, but not to a particular destination. The typical choices are set out in the UCC at Section 2-319:

• F.O.B. [place of shipment] (the place from which the goods are to be shipped goes in the brackets, as in ―F.O.B. Seattle‖). F.O.B. means ―free on board‖; the seller‘s obligation, according to Section 2-504 of the UCC, is to put the goods into the possession of a carrier and make a reasonable contract for their transportation, to deliver any necessary documents so the buyer can take possession, and promptly notify the buyer of the shipment.
• F.A.S. [named port] (the name of the seaport from which the ship is carrying the goods goes in the brackets, as in ―F.A.S. Long Beach‖). F.A.S means ―free alongside ship‖; the seller‘s obligation is to at his ―expense and risk deliver the goods alongside the vessel in the manner usual in that port‖ and to provide the buyer with pickup instructions. Uniform Commercial Code, Section 2-319(2).
• C.I.F. and C. & F. These are actually not abbreviations for delivery terms, but rather they describe who pays insurance and freight. ―C.I.F‖ means ―cost, insurance, and freight‖—if this term is used, it means that the contract price ―includes in a lump sum the cost of the goods and the insurance and freight to the named destination. ‖Uniform Commercial Code, Section 2-320. ―C. & F.‖ means that ―the price so includes cost and freight to the named destination.‖ Uniform Commercial Code, Section 2-320.