Question

Hillary enters into a shipment contract with a dress manufacturer for fifty red dresses. The dress manufacturer sends fifty blue dresses. The dresses are damaged during shipment. Who bears the risk of loss and​ why? A. the​ carrier, because of its duty to protect goods in shipment B. the dress​ manufacturer, because the goods are​ non-conforming C. the dress​ manufacturer, because this is a shipment contract D. ​Hillary, because there has been substantial compliance by the dress manufacturer E. ​Hillary, because this is a shipment contract

Answer 1

Answer: E. ​Hillary, because this is a shipment contract

Explanation:

When Parties enter into a Shipment Contract, it means that the Buyer assumes the risk for the goods being delivered even before it is delivered.

To clarify, in a Shipment Contract, The Seller only has responsibility up until the point that they deliver the goods to a Carrier or the point of Shipment. Under this contract this is also known as the Point of Delivery.

Once they have delivered it to the point of Shipment, anything that happens thereafter is on the buyer.

This is a Shipment Contract in the above scenario and the dresses were damaged during shipment which absolves the seller as they had already delivered and shipped the dresses so the risk of loss is on Hillary.