A retail furniture company (Buyer) contracts to purchase 50 dining room tables from a manufacturer (Seller). The contract specifies that the tables are to be picked up by a third-party carrier at the Seller’s warehouse. The Seller ensures the tables are properly loaded onto the carrier’s truck. While in transit, the truck is involved in an accident, and 20 of the tables are damaged. Assuming there are no additional provisions in the contract about risk allocation, who is responsible for the loss and why?
The Seller is responsible because the goods had not yet been physically delivered to the Buyer’s location.
The Buyer and Seller share responsibility because the contract does not specify how to handle this issue.
The Buyer is responsible because risk of loss transferred to the Buyer once the Seller handed the goods over to the carrier.
The carrier is responsible because it was in possession of the goods when the damage occurred.
The details provided in the question establish that the Buyer agreed to take responsibility for the goods at the point they were handed over to the carrier at the Seller’s warehouse. Under the Uniform Commercial Code (UCC), this type of arrangement is considered a shipment contract. In a shipment contract, risk of loss transfers to the buyer once the seller delivers the goods to the third-party carrier in a proper manner.
The incorrect options stem from common misunderstandings: the belief that the Seller retains responsibility confuses shipment with destination contracts. Risk of loss does not transfer to the carrier unless explicitly agreed in the contract. The suggestion of shared responsibility is incorrect because the UCC provides clear default rules when the contract does not specify risk allocation.
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