Question

Buyer ordered goods from Sue Seller. The contract required Seller to deliver them FOB Buyer's place of business. Buyer inspected the goods, discovered they failed to conform to the contract, and rightfully rejected them. In the event of loss of the goods, which of the following is a true statement?

A. Seller initially had the risk of loss, and it remains with her after delivery.
B. Risk of loss passes to Buyer upon tender of the goods FOB Buyer's place of business.
C. Buyer initially had the risk of loss, but it is shifted to Seller upon rightful rejection.
D. If Seller used a public carrier to transport the goods to Buyer, risk of loss is on Buyer during transit.

Answer 1

The correct statement in this scenario is option C. Buyer initially had the risk of loss, but it is shifted to Seller upon rightful rejection. The correct option is (b).

Step-by-step explanation:

The correct statement in this scenario is option C. Buyer initially had the risk of loss, but it is shifted to Seller upon rightful rejection.

FOB stands for 'Free On Board' and indicates that the seller is responsible for delivering the goods to a specified location. In this case, the contract states that the goods are to be delivered FOB Buyer's place of business, meaning the seller is responsible for delivering the goods to the buyer's place of business.

However, when the buyer inspects the goods and rightfully rejects them due to non-conformity with the contract, the risk of loss is shifted back to the seller. The seller is then responsible for any loss or damage that may occur to the goods.