Law School Case Brief
Cook Specialty Co. v. Schrlock - 772 F. Supp. 1532 (E.D. Pa. 1991)
The term "F.O.B., place of shipment," means that the seller must at that place ship the goods in the manner provided in 13 Pa. Cons. Stat. Ann. § 2-504 and bear the expense and risk of putting them into the possession of the carrier. 13 Pa. Cons. Stat. Ann. § 2319. At the time the carrier takes possession, the risk of loss shifts to the buyer. The Uniform Commercial Code provides: Where the contract requires or authorizes the seller to ship the goods by carrier if it does not require him to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier. 13 Pa. Cons. Stat. Ann. § 2509. Goods are not "duly delivered" under 13 Pa. Cons. Stat. Ann. § 2-509, however, unless a contract is entered which satisfies the provisions of 13 Pa. Cons. Stat. Ann. § 2-504. Section 2-504, entitled "Shipment by Seller" provides that: Where the seller is required or authorized to send the goods to the buyer and the contract does not require him to deliver them at a particular destination, then unless otherwise agreed he must put the goods in the possession of such a carrier and make such a contract for their transportation as may be reasonable having regard to the nature of the goods and other circumstances of the case. 13 Pa. Cons. Stat. Ann. § 2-504.
Plaintiff entered into a sales contract with defendant MSI for the purchase of a Dries & Krump Press Brake in August of 1989 for $28,000. The terms of the contract were F.O.B. MSI's warehouse in Schaumburg, Illinois. Defendant R.T.L., also known as Randy's Truck Lines, (Carrier) was used to deliver the press brake from the defendant's warehouse to the plaintiff in Pennsylvania. MSI obtained a certificate of insurance from the Carrier with a face amount of $100,000 and showing a $2,500 deductible. On October 20, 1989, the carrier took possession of the press brake at MSI’s warehouse. While still in transit, the press brake fell from the Carrier’s truck. The Carrier was cited by the Illinois State Police for not properly securing the load. Plaintiff has recovered damages of $5,000 from the Carrier’s insurer, the applicable policy limit for this particular incident. The machine was worth $28,000. Plaintiff then filed an action against MSI to recover for the machine’s loss. Plaintiff and MSI filed cross-motions for summary judgments.
Did the seller bear the risk of loss of the goods to be delivered to the buyer through a carrier?
According to the Court, the term “F.O.B., place of shipment,” meant that the seller must at the place ship the goods in the manner provided under the Uniform Commercial Code, and bear the expense and risk of putting them into the possession of the carrier. Thus, MSI bore the expense and risk of putting the machine into the carrier's possession for delivery. At the time the carrier takes possession, the risk of loss shifted to the buyer. The Court averred that for F.O.B. seller’s warehouse contract, the buyer would bear the risk of loss in transit. As such, the Court granted summary judgment in favor of MSI.
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