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anil kumr   01 May 2016

Clarity on for destination price basis

Dear Experts,

 

We are an organization located at Kochi, Kerala India. And in thix case we are the PURCHASER

 

Recently we took a quotation from a supplier for electronic items. The price details of the quotation is given below ;
 

Basic price : Rs.100000

Add Tax 12.5% without form C Rs. 12500

ADD Freight upto site Rs. 7500

-------------
Total FOR Destination Price Rs.120000

=========

Accordingly we released the PO on this vendor and made a payment of Rs. 112500/- as advance payment. The price basis was mentioned as FOR Destination which is inclusive of Basic price, Packing & Forwarding charges, Taxes & Duties. The freight charges will be paid by us immediately on delivery of the item at our site. The vendor delivered the item at our site and is now asking us to pay the freight charges. 

However, now my finance department is saying that they would not release the freight charges as the price basis is FOR Destintion and as such the vendor should bear the Freight charges upto site. Even though the freight charges were mentioned in the quotation and we in our PO mentioned the same as to our account and will be released immediately on receipt of the consignment at our site, it has no validity as the price basis terms " FOR Destination means , once the item is dispatched the purchaser will not make any payment to the supplier.

And as a justification we through an interoffice communication informed our Finance department that the delivery of the material is up to our site is the sole responsibility of the vendor and FOR Destination means only that. As regards the freight charges are concerned, we can pay it either prior to dispatch or immediately after receipt of the material. and FOR Destination does not mean that the purchaser will not make any payment after receipt of the material. Nevertheless due to some ego issues our Finance is not ready to release the freight charges to the vendor. Under the above circumstance, undersigned would like to have detailed information as to the validity of the statement of our finance department. 


 



 3 Replies

JustAdvisor (IT)     01 May 2016

what is the custom of your trade? what do other companies do with their suppliers?

Sathiraju Girajala   29 January 2021

FOB Destination includes delivery upto site. It includes all including packing and forwarding,freight and insurance. Finance Department's stand is correct.

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