Mediumistic has a contract with Crown Door Company which requires Mediumistic to sell twelve boxcar loads of plywood to Crown and Mediumistic should import the wood from Taiwan and deliver it to Crown’s plant in Atlanta. Mediumistic shipped the wood from Taiwan to Savannah. However, in Savannah,as the railroad was negligent in loading the train which caused the cargo to shift during the trip,finally the wood got damaged. Issue
The issue of the case is that which party should bear the risk of loss given that the railroad’s negligence in loading the train during transport caused the damage to the goods and the contract indicates Mediumistic would import the wood from Taiwan and deliver it to Crown’s plant in Atlanta. A destination contract requires the seller to deliver conforming goods to a specific destination. The risk of loss in a destination contract is on the seller while the goods are in transport. The buyer doesn’t have to pay for destroyed goods.
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The risk of loss does not pass until the goods are tendered to the buyer at the specified destination. A destination contract was created requiring the use of terms as “place of destination,ex-ship”. Analysis/Application In the contract between Mediumistic and Crown Door Company ,the terms like”Mediumistic would import the wood from Taiwan and deliver it to Crown’s plant in Atlanta”appears, which is a term of term”place of destination”. Therefore,the contract is a destination contract.
A destination contract expresses that the risk of loss is on the seller while the goods are in transport and the risk of loss will be passed to the buyer when the goods are tendered to the buyer. As the goods were damaged because of railroad’s negligence in loading the train during transport, the risk of loss should be born by the seller. Conclusion Because the seller and the buyer were in a destination contract and the damage was caused during the transportation. The seller bears the risk of loss. Business Law By Guggenheim