Question

Bell, by telegram to Major Corp., ordered 10,000 yards of fabric, first quality, 50% wool and 50% cotton. Major accepted the order and packed the fabric for shipment. In the process, it discovered that one-half of the fabric packed had been commingled with fabric that was 30% wool and 70% cotton. Because Major did not have any additional 50% wool fabric, it decided to send the shipment to Bell as an accommodation. The goods were shipped and, later the same day, Major wired Bell its apology, informing Bell of the facts and indicating that the 5,000 yards of 30% wool would be priced at $2 a yard less. The carrier delivering the goods was destroyed on the way to Bell. Who bears the risk of loss?

A. Bell, if the shipping terms were FOB Bell's place of business.
B. Bell, because Bell has title to the goods.
C. Major, because the order was not a signed writing.
D. Major, because it shipped goods that failed to conform to the contract.

Answer 1

The risk of loss typically depends on various factors such as shipping terms and conformity to the contract. In this case, Major Corp shipped fabric that was non-conforming to Bell's order and would likely bear the risk of loss, irrespective of title or shipping terms.

Step-by-step explanation:

The question pertains to a scenario where Major Corp shipped goods that did not fully conform to the contractual specifications agreed upon with Bell. Bell had ordered 10,000 yards of fabric, 50% wool and 50% cotton, but received half of the shipment with fabric that was 30% wool and 70% cotton. Major Corp decided to send the non-conforming goods as an accommodation and informed Bell of the discrepancy and pricing adjustment. After the shipment was destroyed in transit, the issue arises as to who bears the risk of loss.

In such commercial transactions, generally defined by the Uniform Commercial Code (UCC), the risk of loss in a sales contract varies depending on the terms and conditions agreed upon. In this case, it would depend on the shipping terms, title passage, and conformity of goods to the contract. If the shipping terms were FOB (Free On Board) Bell's place of business, then Bell would bear the risk of loss as they would have been in constructive possession of the goods once shipped. However, given that Major Corp shipped goods that did not conform to what was contractually agreed upon, under the UCC, Major would likely still bear the risk of loss since they sent non-conforming goods without Bell's consent, which can be seen as a breach of contract.