UCC Question: Risk of Loss and Destruction of Goods

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throwaway1222

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UCC Question: Risk of Loss and Destruction of Goods

Postby throwaway1222 » Wed Jun 13, 2018 2:09 pm

Hi all,

Im studying for the bar and I am hoping someone could clarify the difference and contradiction I see between UCC 2 613 --(https://www.law.cornell.edu/ucc/2/2-613) and UCC 2 509 (https://www.law.cornell.edu/ucc/2/2-509).

I am confused, because 2-613 seems to say that if the risk of loss has not passed to the buyer yet, then even just partial damage will void the K unless the buyer takes the K at a reduced price. But, then how does this not make 2-509 moot? 2-509 described when the seller BEARS the RISK OF LOSS, which, as I understand it, obviously includes damages to the goods.

To simplify: I read 613 as saying that seller is always off the hook if the goods are damaged, but 509 as saying seller will bear the risk of loss in certain situations. How can both these things be true? I obviously am sure I am reading something wrong, but cant see it.

Thanks all.

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4LTsPointingNorth

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Re: UCC Question: Risk of Loss and Destruction of Goods

Postby 4LTsPointingNorth » Wed Jun 13, 2018 2:57 pm

2-509 describes when the risk of loss passes from seller to buyer in the absence of breach by either party.

2-613 describes what happens if there's a casualty to identified goods without fault of either party before the risk of loss has passed from the seller to the buyer.

Can you restate where you're seeing the conflict between the two? Maybe with a brief hypo? I'm not sure I see it

throwaway1222

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Re: UCC Question: Risk of Loss and Destruction of Goods

Postby throwaway1222 » Wed Jun 13, 2018 5:45 pm

4LTsPointingNorth wrote:2-509 describes when the risk of loss passes from seller to buyer in the absence of breach by either party.

2-613 describes what happens if there's a casualty to identified goods without fault of either party before the risk of loss has passed from the seller to the buyer.

Can you restate where you're seeing the conflict between the two? Maybe with a brief hypo? I'm not sure I see it


Sure.

2-509 implicitly is discussing "casualty" as well isnt it? Thats what the "loss" is in "risk of loss." Also, with your description, 509 is saying that the seller bears the risk of loss before it passes to buyer, but 613 is telling us that the seller doesn't bear the risk of loss if it doesnt pass to the buyer first.

So, to simplify, it seems to me these are what the two are saying:

2-509: describes who bears the risk of loss from casualty when neither party is at fault
2-613: describes that no one bears the risk of loss when there is casualty when neither party is at fault

Does my confusion make sense? I know I am missing something, I just dont know what it is.If I was guessing I think maybe Im wrong in thinking the "loss" in "risk of loss" in 509 is about the same type of damages that are discussed in 613...but then how is it different?

Hypo:

Buyer ships goods to seller. The truck with the goods has a crash and all the goods are destroyed. We would look to 613 to tell us who bears the risk of this loss...but we also are suppose to look to 509 to tell us no one bears the risk of this loss??

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4LTsPointingNorth

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Re: UCC Question: Risk of Loss and Destruction of Goods

Postby 4LTsPointingNorth » Wed Jun 13, 2018 6:06 pm

I think your confusion is stemming from your interpretation of the consequences of 2-613. Keep in mind that 2-613 applies to goods identified at the time the contract is made.

An example might help.

Imagine that there is a contract in place for a specific church organ that a buyer had agreed to buy for $10,000.

Imagine that the church organ is destroyed without fault of either party before the risk of loss has passed to the buyer. Look to 2-509 for guidance of when, specifically, the risk of loss passes to the buyer. For purposes of 2-613, the only relevant part is that the risk of loss has not yet passed to the buyer.

Now let's look at the effects under 2-613.

Under 2-613, the destroyed church organ is a total loss and therefore the contract is avoided.

Avoiding the contract means that neither party is in breach, so no legal remedies are available to either the buyer or the seller.

However, the church organ has still been destroyed, which means that the seller has suffered a loss. The buyer had contracted to pay $10,000 for the church organ, but the church organ was destroyed and 2-613 lets the buyer avoid the contract. Because of this, the seller no longer has a church organ and also will not receive $10,000.

Does that help?

throwaway1222

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Re: UCC Question: Risk of Loss and Destruction of Goods

Postby throwaway1222 » Wed Jun 13, 2018 6:20 pm

4LTsPointingNorth wrote:I think your confusion is stemming from your interpretation of the consequences of 2-613. Keep in mind that 2-613 applies to goods identified at the time the contract is made.

An example might help.

Imagine that there is a contract in place for a specific church organ that a buyer had agreed to buy for $10,000.

Imagine that the church organ is destroyed without fault of either party before the risk of loss has passed to the buyer. Look to 2-509 for guidance of when, specifically, the risk of loss passes to the buyer. For purposes of 2-613, the only relevant part is that the risk of loss has not yet passed to the buyer.

Now let's look at the effects under 2-613.

Under 2-613, the destroyed church organ is a total loss and therefore the contract is avoided.

Avoiding the contract means that neither party is in breach, so no legal remedies are available to either the buyer or the seller.

However, the church organ has still been destroyed, which means that the seller has suffered a loss. The buyer had contracted to pay $10,000 for the church organ, but the church organ was destroyed and 2-613 lets the buyer avoid the contract. Because of this, the seller no longer has a church organ and also will not receive $10,000.

Does that help?


Thank you so much. That absolutely helps, and it makes perfect sense now. You're correct...I was assuming 613 meant that both parties were basically put back into their original position, but was stupidly not thinking that the seller is obviously at a loss because their goods are destroyed.

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4LTsPointingNorth

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Re: UCC Question: Risk of Loss and Destruction of Goods

Postby 4LTsPointingNorth » Wed Jun 13, 2018 6:25 pm

Thank you so much. That absolutely helps, and it makes perfect sense now. You're correct...I was assuming 613 meant that both parties were basically put back into their original position, but was stupidly not thinking that the seller is obviously at a loss because their gods are destroyed


No problem. Helping was totally worth it just for the chuckle I just had at the typo bolded above :) [Edit it back in!!]



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