Question

21-1 Risk of Loss

Mackey orders from Pride one thousand cases of Greenie brand peas from lot A at list price to be shipped F.O.B. Pride’s city via Fast Freight Lines. Pride receives the order and immediately sends Mackey an acceptance of the order with a promise to ship promptly. Pride later separates the one thousand cases of Greenie peas and prints Mackey’s name and address on each case.The peas are placed on Pride’s dock, and Fast Freight is notified to pick up the shipment. The night before the pickup by Fast Freight, through no fault of Pride’s, a fire destroys the one thousand cases of peas. Pride claims that title passed to Mackey at the time the contract was made and that risk of loss passed to Mackey when the goods were marked with Mackey’s name and address. Discuss Pride’s contentions. (See Risk of Loss.)

Answer this using the IRAC writing Format

I-Describe the issue at hand (the question being asked)

R-Describe the rule that is applicable in this situation

A-Apply the rule to the facts of yor situation

C-Draw a conclusion

Answer 1

Issue: Issue at hand is the bearing of risk of loss with respect to the damage due to fire.

Rule: Rule to be applied is Uniform Commercial Code where, "the goods must be in existence" and "the goods must be identified to the contract" before the title and risk of loss pass from the seller to the buyer.

Application: The goods in the given situtation are peas. The greenie peas were in existence at the time of formation of contract. But the peas are not identified at the time of formation of contract because they are not separated from the lot A. The title could not pass to the buyer due to lack of identification of Peas at the time of formation of contract.

Conclusion: The risk of loss is with seller that is, Pride and not by Mackey, as the risk of loss would pass to buyer Mackey upon delivery of conforming goods to the carrier. Since the goods were destroyed before fast frieght, the risk of loss has to be borne by the seller Pride.

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