Contracts and Sales Multistate Bar Practice Exam

Which scenario would mean the risk of loss is still on the seller?

1. The buyer finds a defect in the goods

2. The buyer has accepted the goods as they are

3. The seller failed to deliver the goods

4. The seller is a nonmerchant

The correct answer is: The buyer finds a defect in the goods

In the context of sales contracts, the risk of loss indicates which party bears the burden of any loss or damage to the goods. When the risk of loss is on the seller, it implies that the seller remains responsible for any damage or loss that occurs until the goods are properly delivered or accepted by the buyer. When the buyer finds a defect in the goods, the situation indicates that the seller may still bear the risk of loss. This is based on the premise that the defect means the goods are not in conformity with the contract, which suggests that the seller's responsibility extends until the buyer has both accepted the goods and acknowledged their condition. If the goods are defective, they have not been accepted in a way that would transfer the risk of loss to the buyer. Thus, the seller is still liable for any issues related to the defective goods. The other scenarios do not maintain the risk of loss on the seller. If the buyer has accepted the goods as they are, that acceptance would generally transfer the risk of loss to the buyer, even if they later discover a defect. If the seller failed to deliver the goods, the buyer would not have possession of them, and thus risk of loss does not apply in the typical sense. Lastly, the status of