Quality Computer Company agrees to sell one hundred hard drives to Retail Electronics, Inc. The hard drives, which Retail Electronics expressly requires to have certain amounts of memory, are to be shipped "F.O.B. Retail Electronics distribution center in Memphis, TN." When the drives arrive, Retail Electronics rejects them and informs Quality Computer, claiming that the drives do not conform to Retail Electronics' memory requirement. A few hours later, the drives are destroyed in a fire at Retail Electronics' distribution center. Will Quality Computer succeed in a suit against Retail Electronics for the cost of the goods?

Question

What will be an ideal response?

Answer 1

No, because the goods were nonconforming, and so the cost of their loss will be borne by Quality Computer, the seller. When goods are shipped and destroyed while in the possession of the buyer, if a contract does not state who bears the risk of loss, the determining factor is whether there has been a breach of the contract. There is a breach if the goods are so nonconforming as to give the buyer a right of rejection. In that situation, the risk of loss belongs to the seller until the defects are cured or until the buyer accepts the goods in spite of their defects. It makes no difference, in these circumstances, whether the agreement is a shipment contract or a destination contract. Here, the goods were destroyed without their defects being cured and without the buyer's accepting them anyway.