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The Uniform Commercial Code, as adopted in North Carolina, dictates when the transfer of risk of loss occurs. N.C. Gen. Stat. § 25-2-509(1)(a) provides, in pertinent part: 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 even though the shipment is under reservation.
The parties had a shipment contract for the shipment of wine to the buyer from the seller. The buyer refused liability for the shipment's loss after the shipment was lost at sea. In the seller's action, the trial court held that the risk of loss did not pass to the buyer upon the delivery of the wine to the carrier pursuant to the provisions of N.C. Gen. Stat. § 25-2-509(1)(a).
Was the trial court correct in its conclusion that the risk of loss for the wine never passed from the seller to the buyer due to the failure of seller to give prompt notice of the shipment to the buyer?
The court affirmed and held that the seller was burdened with special responsibilities under the shipment contract because of the nature of the risk of loss being transferred. The requirement of prompt notification by the seller was required to be construed as taking into consideration the need of a buyer to be informed of the shipment in sufficient time for him to take action to protect himself from the risk of damage to or loss of the goods while in transit. Whether notification had been "prompt" was to be determined on a case-by-case basis. The seller's notice to the buyer was not prompt where it was reported after the loss had been incurred and the buyer could not have protected his interests. Therefore, the buyer would have been entitled to reject the shipment.