Final answer:
In commercial transactions, a shipment contract is presumed unless a contract explicitly states otherwise, indicating when risk transfers from seller to buyer. The risk passes to the buyer upon delivery to the carrier, unlike a destination contract where risk transfers upon delivery to a specified location.
Step-by-step explanation:
A shipment contract or destination contract determines when the risk of loss or damage to goods passes from the seller to the buyer. In the absence of explicit terms in the contract specifying otherwise, a shipment contract is presumed. This means that the risk passes to the buyer when the seller delivers the goods to the carrier.
In a destination contract, on the other hand, the risk of loss remains with the seller until the goods are delivered to a specified location. The key difference lies in the point of transfer of risk, which can significantly affect the responsibilities and liabilities of each party in the transaction.
Therefore, it is crucial for a contract to clearly indicate if it departs from this presumption to avoid legal disputes. It is advisable to explicitly state within the sales contract whether the agreement is a shipment or destination contract to provide clarity and protect the interests of both the buyer and seller.