Final answer:
The question deals with transportation terms indicating that the buyer is responsible for freight costs. The three ways to express this are FOB Destination, Freight Collect; FOB Destination, Freight Prepaid and Charged Back; and Freight Collect.
Step-by-step explanation:
When the Palmer Company in Bay Hill sells to Tiger Woods in Orlando and the buyer is responsible for the freight costs, this can be expressed in several ways. Here are three common terms used to indicate that the buyer pays for shipping:
- FOB Destination, Freight Collect: This means the goods are delivered to the buyer's destination, and the buyer is responsible for the freight charges upon delivery.
- FOB Destination, Freight Prepaid and Charged Back: This indicates that the seller pays for the shipping costs upfront but then invoices the buyer for these costs.
- Freight Collect: A straightforward term that implies the buyer must pay the freight charges directly to the carrier upon delivery.
Each of these terms is a type of delivery agreement known as an Incoterm, which clarifies the shipping responsibilities between the buyer and seller. When using these terms, it is essential for both parties to understand who is responsible for the freight costs, the point at which the ownership of the goods transfers, and who bears the risk during transit.