Article 2 — Sales · Section 2-319
This section addresses the ways in which the risk of loss may be allocated in the event of a breach of contract or delivery by the seller or buyer, highlighting rules related to 'shipment' and 'destination' contracts.
Source: U.C.C. § 2-319
UCC § 2-319 provides for the allocation of risk of loss under contracts of sale. The risk of loss occurs when a seller delivers goods in accordance with the contract, including conditions that may specify terms such as shipment or destination contracts.
UCC § 2-319 sets out the rules regarding the risk of loss in sales agreements. Under this section, the risk of loss may be assigned to either buyer or seller based on the specific terms of the contract, such as whether the goods are to be shipped or delivered directly to the buyer.
The legal responsibility for damage or loss of goods, which indicates who bears financial responsibility if the goods are lost or damaged.
A contract whereby the seller is obligated to ship goods to the buyer and the risk of loss transfers to the buyer when the goods are delivered to the carrier.
A contract in which the seller is obligated to deliver goods to a specific destination, and the risk of loss remains with the seller until the goods reach that destination.
Example 1
In a shipment contract, if a seller ships a product to the buyer and the package is lost in transit, the buyer bears the risk of loss.
Example 2
In a destination contract, if the seller ships goods to a specific location and they are damaged before arrival, the seller bears the risk of loss until the goods reach that destination.