Merchandise Risk of Loss

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Merchandise Risk of Loss

When two parties enter into a contract to buy and sell merchandise, they will usually specify who will bear the risk of loss if problems were to arise. If no specific provisions are set by the parties, the Uniform Commercial Code (UCC) provides some general rules for determining who will bear the risk of loss.

Shipment Contract

If the contract does not require the seller to deliver the merchandise to a specified destination, then the risk of loss passes to the buyer when the seller delivers the merchandise to a carrier. This type of contract is called a "shipment contract"

The following is a list of common terms that designate the contract as a shipment contract:

Destination Contract

If the contract does require the seller to deliver the merchandise to a specified destination, then the risk of loss does not pass until the seller has delivered it to that destination. This type of contract is called "destination contract."

The following is a list of common terms that designate the contract as a destination contract:

What Happens When It Is Impossible To Determine Which Type Of Contract It Is?

In the case where the terms of the contract are so ambiguous that it is extremely difficult or impossible to determine whether the contract is a shipment or a destination contract, the UCC provides two additional guidelines:

How Can an Attorney Help Me?

There are experienced attorneys that specialize in dealing only with sale of merchandise disputes. If you are in a contract for a sale of merchandise, talk to an attorney to learn more about your rights and defenses. If you are in a legal dispute over a sale of merchandise, contact an attorney to recover the losses you have suffered.

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Last Modified: 03-12-2014 03:49 PM PDT

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