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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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557.0000 Transportation Charges—Regulation 1628
Annotation 557.0210
557.0210 F.O.B. Clause. When a contract does not contain a specific title provision but does contain the statement F.O.B. point of shipment:
(1) Section 2319 of the Uniform Commercial Code provides that:
"The term F.O.B. … is a delivery term under which … when the term is F.O.B. the place of shipment, the seller must at that place ship the goods in the manner provided in … [section 2504 of the Commercial Code] and bear the expense and risk of putting them into the possession of the carrier."
In other words, the contract is a "shipment contract," when the contract contains an F.O.B. place of shipment term. Title thus passes, in accordance with the rule stated in section 2401(2)(a) of the Commercial Code, at the time and place of shipment. We are of the opinion that when the property is shipped by an independent carrier, title passes when the goods are placed with the carrier. (2) Where shipment is made by facilities of the retailer, however, we are of the opinion that the contract is a "destination contract" despite use of the F.O.B. shipping point term. Section 2401(2)(b) of the Commercial Code provides that in the case of "destination contracts" title passes on tender of delivery at the destination. In other words, the sale takes place at the destination. 10/31/74.