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29. On the above facts, when would the risk of loss of the bracelets pass to the buyer?
A buyer and a seller entered into a contract for the sale of 10,000 novelty bracelets. The seller had the bracelets in stock. The contract specified that the seller would ship the bracelets by a third-party carrier. However, the contract did not specify either who was to pay the costs of carriage or the place of tender for the bracelets.
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A is incorrect. UCC § 2-509(1)(a) and (b) together refute the notion that the risk of loss passes from the seller to the buyer at the time of contract formation. UCC §§ 2-509(1) and 2-503, comment 5 govern the passing of the risk of loss under these circumstances, and, because this would be considered a shipment contract, the risk of loss would pass from the seller to the buyer when the seller duly delivered the goods to the third-party carrier.
B is incorrect. UCC § 2-501 defines the concept of identification but does not articulate the standard for determining when the risk of loss passes under the circumstances present here. UCC §§ 2-509(1) and 2-503, comment 5 govern the passing of the risk of loss under these circumstances, and, because this would be considered a shipment contract, the risk of loss would pass from the seller to the buyer when the seller duly delivered the goods to the third-party carrier.
D is incorrect. As stated in UCC § 2-509(1)(b), under a destination contract, the risk of loss shifts from the seller to the buyer when the goods are duly tendered to the buyer rather than when the goods are unloaded. More importantly, however, this is not a destination contract. Comment 5 to UCC § 2-503 provides that where the contract is otherwise silent, a shipment contract is presumed where the contract requires shipment by a third-party carrier. Because this is a shipment contract, the risk of loss would pass from the seller to the buyer when the seller duly delivered the goods to the third-party carrier.