a. What are the arguments that the risk of loss remained with Ninth Street?
Harrison, a men’s clothing retailer located in Westport, Connecticut, ordered merchandise from Ninth Street East, Ltd., a Los Angeles-based clothing manufacturer. Ninth Street delivered the merchandise to Denver-Chicago Trucking Company (Denver) in Los Angeles and then sent four invoices to Harrison that bore the notation “F.O.B. Los Angeles.” Denver subsequently transferred the merchandise to a connecting carrier, Old Colony Transportation Company, for final delivery to Harrison’s Westport store. When Old Colony tried to deliver the merchandise, Harrison’s wife asked the truck driver to deliver the boxes inside the store, but the driver refused. The dispute remained unresolved, and the truck departed with Old Colony still in possession of the goods. By letter, Harrison then notified Ninth Street of the nondelivery, but Ninth Street was unable to locate the shipment. Ninth Street then sought to recover the contract purchase price from Harrison. Harrison refused, contending that risk of loss remained with Ninth Street because of its refusal to deliver the merchandise to Harrison’s place of business.
b. What are the arguments that the risk of loss passed to Harrison?
c. What is the appropriate outcome?
The request for transferring the goods to the business place is rational. The act of denial by Company O from doing so and returning with goods does not transfer the risk of loss to Individual H.
Individual H's request to Company O is reasonable, which when denied does not put Individual H at fault.
Based on F.O.B.’s place, the risk of loss of goods is transferred to the purchaser the moment the goods are handed to the carrier, which is Company O in this case. Depending on the same notion, it is not the duty of Company O to deliver such goods inside the store, as asked by Individual H.
Company O is not obliged to deliver the goods inside the business place of Individual H, as per the F.O.B. place of contract of shipment. So the risk of loss is to be borne by Individual H.
The term F.O.B. refers to free on-board shipment. In the contract, it means that the possession gets transferred to the receiver when the sender sends the goods for transit. Company N provided free on-board shipment, which shifts the risk of loss to transfer to Individual H, right after the possession of goods is shifted to Company D.
Individual H is liable to bear the purchase price of goods, as mentioned in the contract, because Company N provided free on-board shipment.