champloo wrote: SeewhathappensLarry wrote: champloo wrote: SeewhathappensLarry wrote: quirky wrote: champloo wrote:
Law4lyf wrote:Can someone explain to me the risk of loss rules? So for example, if the parties agree in a contract FOB seller then we don't have to run the 4 part analysis correct(Terms of agreement,
breach, courier, merchant nonmerchant)?
lol im so fucked. When i see risk of loss its either shipment/destination/equitable conversion and choose whatever sounds right. I had no idea there was some sort of 4 step analysis.
Hahaha, same here. But I thought I kind of understood the rules until I read that post.
The way I understand it is the FOB k doesn't control unless 1) the parties didn't agree beforehand who will bear the risk of loss, and 2) one of the parties didn't breach. Only then does it matter if it's a shipment or delivery contract. Someone correct me if I'm wrong
number 2 makes sense but not sure about 1. triple negatives are really hard for me right now tho.
Bar prep makes me talk in streams of consciousness. What I mean is: 1) if parties agree beforehand who bears of the risk of loss, that controls; 2) if they didn't agree, then if a party breaches, that party bears the risk of loss. 3) if the parties didn't agree and there is no breach, then the risk of loss depends on whether the k is shipment or delivery
thank you, that makes a lot of sense. but how do you know if a k is shipment or delivery if parties don't agree beforehand that it is a shipment/delivery?
To add to what the above poster said, this is the four part test:
1. Have they agreed on risk of loss in the K (beyond mere shipment/destination rules)? If so, those terms apply regardless of shipment/destination.
2. Has either party breached? If so, breaching party bears risk of loss.
3. If there are no other terms, and neither party has breached, look to see whether it's a shipment or destination contract. Shipment shifts risk to buyer after the shipper has (1) gotten the goods to a common carrier, (2) made arrangements for delivery, and (3) notified the buyer. For destination, the seller retains risk of loss until the goods actually arrive at their destination.
4. Ok, but what if the contract doesn't specify shipment or destination or is otherwise unclear? Ask whether the SELLER is a merchant. If they are a merchant, the risk stays with the seller until the buyer receives the goods. If they are not a merchant, the risk shifts to the buyer as soon as the seller tenders the goods. Tendering goods can be just telling the other person that the goods are ready for pick up.
And because someone above said they were having trouble with confusing equitable conversion and the risk of loss problem for goods, it's a little different, but I don't think equitable conversion is something that should worry you (at least in the way I think about it). This is a simple explanation of equitable conversion:
In contracts for RP, unless otherwise specified, after the contract is made but before closing, the buyer bears the risk of loss because the buyer has a form of ownership through equitable conversion.