Question

Roasters Corporation and Outdoor Barbecues, Inc., enter into a contract for a sale of a commercial grill. The contract requires Roasters to deliver the goods to Speedy Delivery Company for transport to Outdoor.
Risk of loss passes to Outdoor when​:

A) Roasters delivers the goods to Speedy.
B) Roasters and Outdoor enter into their contract.
C) Speedy transports the goods to Outdoor.
D) Outdoor begins to use the grill.

Answer 1

Answer:

A) Roasters delivers the goods to Speedy

Explanation:

Risk of loss under the law of contracts is used to determine which party should bear the burden of risk for damage occurring to goods after the sale has been completed, but before delivery has occurred. This is normally used after the contract is formed but before buyer receives goods, something bad happens.

1. The breaching rule applies risk of loss on the seller if at the time of delivery, the goods show up broken.
2. Risk of loss shifts from seller to buyer at the time that seller completes its delivery obligations
3. For a destination contract, then risk of loss is on the seller
4. For a delivery contract, then risk of loss is on the seller
5. if the seller is a merchant, then the risk of loss shifts to the buyer upon buyer's "receipt" of the goods. If the buyer never takes possession, then the seller still has the risk of loss