A Word About International Contracts - Stephanie LaTorre Designs

A Word About International Contracts

International contracts must be clear and concise. Especially when regarding the risk of loss. Risk of loss in sales contracts refers to who will be held liable if an unforeseen incident occurs as in damage or loss of the items for sale. Under section 2-301 General obligations of parties of the Uniform Commercial Code, “The obligation of the seller is to transfer and deliver and that of the buyer is to accept and pay in accordance with the contract.” However, there are some additional conditions.

Risk of Loss in the Absence of Breach (2-509)

(1) Where the contract requires or authorizes the seller to ship the goods by the carrier

  • if it does not require him to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier even though the shipment is under reservation (Section 2-505); but
  •  if it does require him to deliver them at a particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the buyer when the goods are there duly so tendered as to enable the buyer to take delivery.

(2) Where the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the buyer

  • on his receipt of a negotiable document of title covering the goods; or
  • on acknowledgment by the bailee of the buyer’s right to possession of the goods; or
  • after his receipt of a non-negotiable document of title or other written direction to deliver, as provided in subsection (4)(b) of Section 2-503.

(3) In any case not within subsection (1) or (2), the risk of loss passes to the buyer on his receipt of the goods if the seller is a merchant; otherwise, the risk passes to the buyer on tender of delivery.

(4) The provisions of this section are subject to contrary agreement of the parties and to the provisions of this Article on sale on approval (Section 2-327) and on the effect of breach on risk of loss (Section 2-510).

Effect of Breach on Risk of Loss (2-510)

  • Where a tender or delivery of goods so fails to conform to the contract as to give a right of rejection the risk of their loss remains on the seller until cure or acceptance.
  • Where the buyer rightfully revokes acceptance he may to the extent of any deficiency in his effective insurance coverage treat the risk of loss as having rested on the seller from the beginning.
  • Where the buyer as to conforming goods already identified to the contract for sale repudiates or is otherwise in the breach before the risk of their loss has passed to him, the seller may to the extent of any deficiency in his effective insurance coverage treat the risk of loss as resting on the buyer for a commercially reasonable time.

Given this particular situation, I would want to make sure that I was using their contracted carrier for delivery of the item and that they do not waive the burden of risk of loss in the contract. In addition, I would want to be sure that their carrier additionally had the necessary coverage and means to ship my items.

Read More Article

http://www.law.cornell.edu/ucc/2/2-301.html
http://www.law.cornell.edu/ucc/2/2-509.html
http://www.law.cornell.edu/ucc/2/2-510.html

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