Contracts and Sales Multistate Bar Practice Exam

Under what condition is a risk of loss transferred in a carrier case?

1. When the goods are delivered to a retailer

2. Upon arrival of goods at the buyer’s location

3. When goods are tendered to the carrier

4. When the seller completes their delivery obligations

The correct answer is: When goods are tendered to the carrier

In a carrier case, the risk of loss transitions to the buyer at the point when the goods are tendered to the carrier. This reflects a fundamental principle of contract law, particularly under the Uniform Commercial Code (UCC), which governs the sale of goods. When the seller fulfills their obligation by delivering the goods to a chosen carrier, the responsibility for risk shifts to the buyer. This means that once the goods have been relinquished to the carrier—meaning that the seller has done everything necessary to transfer possession—the buyer assumes the risk of any losses, damages, or theft that may occur during transit. This rule is especially vital for transactions involving shipment and delivery, as it delineates when liability for the item moves from the seller to the buyer. While the other options describe scenarios that are related to the delivery process, they do not align with the moment the risk is officially transferred. For instance, the delivery to a retailer occurs after the risk has been transferred, the arrival of goods at the buyer’s location might involve more than just the risk aspect, and the seller completing delivery obligations still does not signify the exact moment when risk is transferred; it specifically happens when goods are placed in the carrier’s possession.