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The N.Y. U.C.C. provides that, unless otherwise agreed, the term F.O.B. at a named place even though used only in connection with the stated price, is a delivery term. N.Y. U.C.C. § 2-319(1). Where the term F.O.B. the place of shipment is used with the term F.O.B. plant, the code provides that the seller must ship the goods in the manner provided in N.Y. U.C.C. § 2-504 and bear the expense and risk of putting them into the possession of the carrier. N.Y. U.C.C. §2-319(1)(a).
Appellant seller filed an action against appellee buyer to recover payment for goods that had been loaded into a container that was later stolen. At Special Term, both parties moved for summary judgment. The court found that the seller's undertaking was to load the goods in a deliverable condition into the carrier's container and that, by doing so and notifying the buyer, delivery was made in conformity with the agreement of the parties. Special Term thus determined that the risk of loss of the goods had passed to the buyer and granted the seller's motion for summary judgment. The Appellate Division reversed Special Term and granted the buyer’s motion for summary judgment, on the basis that there was neither physical delivery to the carrier nor delivery within the meaning of the Uniform Commercial Code. The seller challenged the decision, asserting that the risk of loss had passed to appellee at the time of the theft.
Did the risk of loss pass to the appellee at the time of the theft?
The Court affirmed the appellate court judgment. It held that where the term F.O.B. the place of shipment was used, as here with the term "F.O.B. plant," N.Y. U.C.C. § 2-319 provided that appellant was to ship the goods in the manner provided in N.Y. U.C.C. § 2-504. Section 2-504 required appellant to put the goods into the possession of the carrier, at which time the risk of loss passed to appellee. The loading of the container was not a "delivery" to the carrier unless the parties so agreed. The statements by an officer of appellee and other circumstances were not enough to show that the term F.O.B. did not have its customary meaning or that the parties had "otherwise agreed." Thus, the risk of loss remained with appellant.