Question

On May 2, Lace Corp., an appliance wholesaler, offered to sell appliances worth $3,000 to Parco, Inc., a household appliances retailer. The offer was signed by Lace's president and provided that it would not be withdrawn before June 1. It also included the shipping terms: "FOB -- Parco's warehouse." Parco accepted Lace's offer. If Lace inadvertently ships the wrong appliances to Parco and Parco rejects them 2 days after receipt, title to the goods will

A. Revest to Lace when they are rejected by Parco.
B. Pass to Parco when they are identified to the contract.
C. Pass to Parco when they are shipped.
D. Remain with Parco until the goods are returned to Lace.

Answer 1

Title to the wrong appliances shipped by Lace Corp. revests to Lace upon their rejection by Parco because the rejection signifies that the goods did not conform to the contract terms.

Step-by-step explanation:

When Lace Corp. inadvertently shipped the wrong appliances to Parco Inc. and Parco rejected them, title to the goods would revest to Lace when they are rejected by Parco.

The shipping terms 'FOB -- Parco's warehouse' indicate that the seller, Lace, would bear the risk of loss during transportation until the goods reached Parco's warehouse. However, since the goods shipped were not as specified in the contract, Parco has a right to reject them. Upon rejection, the risk of loss and title would typically revert to the seller, Lace Corp., unless the contract states otherwise.