In a voyage charter, which statement best describes freight prepaid and freight collect in terms of payment timing and risk transfer?

• A. Freight prepaid means the buyer pays at destination
• B. Freight collect means the seller bears all risk
• C. Freight prepaid means the seller pays freight charges at origin
• D. Freight collect means freight is paid on delivery and risk transfer is defined by contract

Answer: (C)

Freight prepaid means the party sending the cargo (the seller) pays the freight charges to the carrier before the cargo is moved, i.e., at origin. That payment timing is the core idea captured here. In a voyage charter, the opposite arrangement—freight collect—puts the obligation to pay on the recipient, typically on delivery. The point at which risk transfers to the cargo owner isn’t dictated simply by prepaid versus collect; it’s defined by the contract of carriage or charter party. So the statement that prepaid means the seller pays freight charges at origin correctly describes the payment timing, while risk transfer depends on the specific contract terms.