Alex recently ordered a drone from a manufacturer in Virginia. Since he lives in Colorado, the...

Alex recently ordered a drone from a manufacturer in Virginia. Since he lives in Colorado, the contract included a shipment clause that read “FOB United Parcel Service (UPS)”. The manufacturer emailed Alex a tracking number once it delivered the drone to the carrier. Unfortunately, while in transit the shipping container and everything inside was destroyed. Based on these facts, who bears the risk of loss?

Group of answer choices

Alex bears the risk of loss because in a FOB place of shipment contract, the risk of loss passes when the goods are delivered to the carrier.

Alex bears the risk of loss as long as he paid for the drone in full.

The carrier (UPS) bears the risk of loss, because they were in possession of the drone when it was destroyed.

The seller, because the risk of loss passes to the buyer upon delivery.

Expert Solution

Answer: Alex bears the risk of loss because in a FOB place of shipment contract, the risk of loss passes when the goods are delivered to the carrier.

Explanation:

The shipment clause includes “FOB United Parcel Service”. This is a shipment contract because the seller is required to put the goods into the possession of the carrier UPS and not required to deliver to the final destination. It is not a destination contract as the place of delivery is not mentioned. Hence this is FOB place of shipment contract and in such a contract, the seller bears the risk of loss until goods are in the possession of the carrier and once they are in carrier’s possession, the buyer bears the risk of loss. Here the loss happened when it was under carrier’s possession and hence Alex bears the risk of loss. Hence answer is the first option.

keosha answered 2 years ago

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