Oceanside entered into a contract with the seller Old Tennessee, for the purchase of $6,431 worth of plants. The terms were sale and delivery C.O.D. with the express provision of "No Risk to Supplier," and a large logo at the top of papers stating:

Question

"NOTICE: ALL SHIPMENTS TRAVEL AT RISK AND COST OF PURCHASER." The plants were shipped by an experienced truck common carrier. Upon arrival in New York, it appeared as though some plants were in a poor state because of excessive heat. Although the carrier on its own marked the bill of lading to indicate that the temperature in the truck should be 50 degrees, this was not done for at least a portion of the journey. Oceanside rejected the shipment by writing "rejected" on the back of the trucker's bill of lading. However, the plants were retained "on consignment" at Oceanside's premises. There were no other formal written rejections or official notices of breach or defects given by the buyer to seller at any point prior to trial. Discuss who has the risk of loss.

Answer 1

Oceanside has the risk of loss in this case. This is not a case of the seller's breaching. The seller sent conforming goods when the plants were delivered to the carrier. The plants were damaged while in transit. Even if you were to find that the seller breached the contract by sending nonconforming plants, the court found that Oceanside did not properly reject the shipment. The court concluded that even though the plants were goods in which the UCC is applicable, the underlying principle of the Code is "freedom of contract." Here the parties negotiated the risk of loss. The contract clearly states that all shipments travel at the risk and cost of purchaser. The seller's risk of loss passed to Oceanside when the plants were delivered to the carrier.