FOB Terms for Medical Supplies: Shipping Point vs Destination

General information about commercial terms, not legal or medical advice.

Short answer

In a medical supply order, “FOB” (free on board) names the point where the seller’s delivery duty ends and the buyer’s begins. Under the Uniform Commercial Code, “FOB shipping point” (place of shipment) means the seller must put the goods into the carrier’s possession at its own expense and risk. “FOB destination” means the seller must transport the goods at its own expense and risk and tender delivery there. The word after “FOB” is what matters, so a quote or purchase order should name a place. For a side-by-side of the two pricing models, see FOB origin vs delivered pricing in medical supply contracts; this page covers the legal text, the federal rule that singles out medical supplies, and a checklist of what to settle in writing.

What FOB means in a supply contract

US sales law defines the term in UCC 2-319 (text published by Cornell Law School’s Legal Information Institute, checked 1 November 2026). Two variants matter for most supply orders:

• F.O.B. place of shipment. The seller must ship the goods at that place 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 “there tender delivery”.

The same section adds that where the term is F.O.B. vessel, car or vehicle, the seller must also, at its own expense and risk, load the goods on board. “Shipping point” and “origin” are everyday labels for the first variant, and “destination” for the second. State enactments of the UCC can differ, and a signed contract can say something else, so treat the statute text as the default frame and the contract as the final word.

How shipping point and destination move risk of loss

Risk of loss, meaning who absorbs a loss if the shipment is damaged or lost in transit, follows the same split. UCC 2-509(1) (checked 1 November 2026) says:

• If the contract does not require delivery at a particular destination, risk passes to the buyer “when the goods are duly delivered to the carrier”. This is the shipment-contract pattern that matches FOB shipping point.
• If the contract requires delivery at a particular destination, risk passes when the goods are there duly tendered to the buyer while in the carrier’s possession, in a way that lets the buyer take delivery. This is the destination-contract pattern.

Who owns the goods in transit, who pays the freight bill and who is named on a carrier claim are separate questions from risk of loss, and a contract can allocate each differently. If a shipment arrives damaged or short, the practical steps are in filing a freight damage or shortage claim.

Why destination terms are common for medical supplies: the federal rule

Federal buyers publish their reasoning, which is a useful primary source even for non-federal purchasers. FAR 47.304-1 (acquisition.gov, checked 1 November 2026) applies to federal solicitations only and is not a rule for private contracts. It says:

• F.o.b. terms are determined “generally on the basis of overall costs” (a).
• Solicitations must specify whether offers are f.o.b. origin, f.o.b. destination, or both (b).
• When destinations are tentative or unknown, the solicitation is f.o.b. origin only (d).
• When acceptance must be at destination, the solicitation is on an f.o.b. destination only basis (f).
• Among the situations where solicitations “shall normally be on an f.o.b. destination only basis” is when “perishable or medical supplies are subject to in-transit deterioration” (g)(4).
• F.o.b. origin allows “diversions to new destinations without price adjustment for transportation” (c)(2).

The takeaway is the structure of the reasoning, not a universal recommendation: the federal rule ties destination terms to in-transit deterioration and to acceptance at destination, and ties origin terms to unknown destinations and diversion flexibility.

Checklist: what to settle in the quote or purchase order

Each question below traces to the sources above. It is a list of things to put in writing, not a ranking of which term is better.

Question to settle	Why it matters (source)
Which named place follows “FOB”?	The statute definitions depend on the place of shipment or destination (UCC 2-319).
Does the contract require delivery at a particular destination?	It decides when risk passes to the buyer (UCC 2-509(1)).
Who bears the expense and risk of loading, if vehicle or car terms are used?	UCC 2-319 puts loading on the seller for those variants.
Where does acceptance take place?	The federal rule requires destination terms when acceptance must be at destination (FAR 47.304-1(f)).
Could the destination change after ordering?	The federal rule treats unknown destinations as origin-only and notes origin allows diversion (FAR 47.304-1(c)(2), (d)).
Do the goods deteriorate in transit?	The federal rule names this for medical supplies (FAR 47.304-1(g)(4)).
Who files a carrier claim for damage or shortage?	Allocate it in writing; see the freight claim guide linked above.

For the wider contract context, see the supply agreement template for medical supplies and the medical supply wholesaler guide.

Common misunderstandings

FOB (the UCC term) is not the same as Incoterms FOB

The International Chamber of Commerce publishes Incoterms as “a set of eleven three-letter trade terms” used in international and domestic contracts to clarify the tasks, costs and risks of delivery (iccwbo.org, checked 1 November 2026). The UCC defines “F.O.B.” separately in domestic sales law. A contract that just says “FOB” without saying which set of rules it relies on leaves room for dispute, so name the rule set. Our Incoterms guide, EXW vs FOB and FOB vs CIF pages cover the Incoterms side.

FOB is not a promise about price, insurance or speed

The sources above define when delivery duty and risk shift. They say nothing about the price, shipping speed or whether insurance is included, so those need their own lines in the contract.

FAQ

What does FOB mean?

FOB stands for free on board. In a US sales contract it marks the place where the seller’s delivery obligations stop and the buyer’s start, as defined in UCC 2-319.

What does FOB shipping point mean for medical supplies?

The seller must put the goods into the carrier’s possession at the named shipping place at its own expense and risk. Where no particular destination is required, risk of loss passes to the buyer when the goods are duly delivered to the carrier (UCC 2-509(1)).

What does FOB destination mean for medical supplies?

The seller must transport the goods at its own expense and risk to the named destination and tender delivery there. Risk passes when the goods are duly tendered there.

What is the difference between FOB origin and FOB destination for medical supplies?

The difference is the point where duty and risk shift: onto the carrier at origin, or at the destination on tender. Federal solicitations treat perishable or medical supplies subject to in-transit deterioration as a normal destination-only case (FAR 47.304-1(g)(4)).

Do Incoterms apply to medical devices?

The ICC describes Incoterms as standards used in international and domestic contracts for the delivery of goods, so they can be written into a contract for any goods, medical devices included. Whether a contract uses them depends on what its parties write into it.

Sources

• Uniform Commercial Code 2-319, F.O.B. and F.A.S. terms, Cornell Law School LII: law.cornell.edu/ucc/2/2-319 (checked 1 November 2026).
• Uniform Commercial Code 2-509, risk of loss in the absence of breach: law.cornell.edu/ucc/2/2-509 (checked 1 November 2026).
• FAR 47.304-1, General (federal acquisition): acquisition.gov/far/47.304-1 (checked 1 November 2026).
• International Chamber of Commerce, Incoterms rules: iccwbo.org/business-solutions/incoterms-rules (checked 1 November 2026).