A retailer enters into a contract to purchase 500 units of glass vases from a manufacturer. The agreement states that the retailer will arrange for a shipping company to pick up the vases at the manufacturer's warehouse. Before the delivery truck arrives, a fire at the warehouse destroys the vases. The retailer demands replacement vases from the manufacturer, arguing that the goods were destroyed while still in the manufacturer’s possession. Which party bears the loss for the destroyed vases under the terms of the agreement?
The retailer bears the risk of loss because the agreement was silent about which party must ensure the goods before delivery.
The manufacturer bears the risk of loss because the fire was an unforeseen event beyond their control.
The manufacturer bears the risk of loss because the goods were destroyed before they left the warehouse.
The retailer bears the risk of loss because responsibility for the goods transferred when they were made available for collection by the shipping company.
The correct answer is that the retailer bears the risk of loss because the agreement provides that the goods are made available for pickup at the manufacturer’s warehouse. Under UCC § 2-509, when such terms specify that the buyer is responsible for arranging transport from the seller’s location, the risk of loss passes to the buyer once the seller has tendered the goods. Tender occurs when the goods are set aside for the buyer and made available for pickup, even if the actual transfer to the shipping carrier has not yet occurred. Therefore, the manufacturer is relieved of responsibility once this tender happens.
Incorrect answers: Some answers incorrectly claim the manufacturer retains the risk of loss because the fire destroyed the goods before shipment. This misapplies the principle of tender under the UCC, as the seller’s responsibility ends once the goods are made available to the buyer at the agreed-upon location.
Ask Bash
Bash is our AI bot, trained to help you pass your exam. AI Generated Content may display inaccurate information, always double-check anything important.
What does UCC § 2-509 specify about risk of loss?
Open an interactive chat with Bash
What does 'tender' mean in the context of this contract?
Open an interactive chat with Bash
What implications arise if a contract is silent on risk of loss?