Chase defended on the ground that as the shipment was C.O.D., neither title to the tomatoes nor risk of loss passed until their delivery to Chase. Who has title? Who has risk of loss? Explain.
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Regan received a letter from Chase, the material portion of which stated: “Chase hereby places an order with you for fifty cases of Red Top Tomatoes, ship them C.O.D.” Promptly upon receipt of the letter, Regan shipped the tomatoes to Chase. While en route, the railroad car carrying the tomatoes was wrecked. Upon Chase’s refusal to pay for the tomatoes, Regan commenced an action to recover the purchase price. Chase defended on the ground that as the shipment was C.O.D., neither title to the tomatoes nor risk of loss passed until their delivery to Chase. Who has title? Who has risk of loss? Explain. |
Explanation
Every sales contract contains certain terms that help in identifying the agreement of the parties that need to be delivered by a carrier. These terms help in the identification of a contract as a shipment contract or delivery contract. The term C.O.D of sales contract identifies the contract as a shipment contract wherein the risk of loss shifts to the buyer, when the goods are delivered to a common carrier. In this case, the risk of loss and the ownership are going to be transferred to Individual C as it is a C.O.D contract.
Verified Answer
The ownership may pass to Individual C and they may need to pay the price of Item T to Individual R.It is because in the case of shipment contract, the risk of loss shifts to the buyer when the goods are delivered to the common carrier.
