For goods sold in transit, when does risk pass to the buyer?

For goods sold in transit, when does risk pass to the buyer?

• A. When the buyer places an order
• B. When the contract is made
• C. Upon final delivery to the destination
• D. After the seller confirms shipment

Answer: (B)

The correct answer is that risk passes to the buyer when the contract is made. This principle is rooted in the concept of risk of loss in sales contracts, particularly under the Uniform Commercial Code (UCC). Once the parties have entered into a binding agreement regarding the sale of goods, the risk associated with those goods transfers to the buyer, even if the goods have not yet been delivered. This transfer of risk means that the buyer assumes responsibility for the goods even while they are still in transit. If anything were to happen to those goods after the contract has been made but before they arrive, the buyer would bear the financial loss. In contrast, placing an order does not constitute the completion of a contract, as it typically involves only an expression of interest without mutual agreement on the terms. Final delivery is a point of transfer for possession, not risk. Lastly, the seller confirming shipment does indicate that the seller has fulfilled their obligation to ship but does not change the point at which the risk has transited to the buyer, which is marked by the making of the contract.

The correct answer is that risk passes to the buyer when the contract is made. This principle is rooted in the concept of risk of loss in sales contracts, particularly under the Uniform Commercial Code (UCC). Once the parties have entered into a binding agreement regarding the sale of goods, the risk associated with those goods transfers to the buyer, even if the goods have not yet been delivered.

This transfer of risk means that the buyer assumes responsibility for the goods even while they are still in transit. If anything were to happen to those goods after the contract has been made but before they arrive, the buyer would bear the financial loss.

In contrast, placing an order does not constitute the completion of a contract, as it typically involves only an expression of interest without mutual agreement on the terms. Final delivery is a point of transfer for possession, not risk. Lastly, the seller confirming shipment does indicate that the seller has fulfilled their obligation to ship but does not change the point at which the risk has transited to the buyer, which is marked by the making of the contract.