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Swift Canadian Co. v. Banet - 224 F.2d 36 (3d Cir. 1955)

Rule:

When goods are delivered "free on board" (F.O.B.) pursuant to contract, the presumption is that the property passes thereupon. This is a presumption and that the phrase F.O.B. is not one of iron-clad meaning. 

Facts:

Seller Swift Canadian Company, a Canadian corporation, entered into an agreement with Defendants, Albert Banet, Sali Banet and Abraham L. Perliman, buyers who do business as Keystone Wool Pullers in Philadelphia. By this contract Keystone agreed to purchase a quantity of lamb pelts at a stipulated price. In March of 1952, Swift advised Keystone of its readiness to deliver the remaining pelts to Keystone on board railroad cars in Toronto for shipment to Philadelphia. However, on or about that same day the United States by its agency, the Bureau of Animal Industry, had issued stricter regulations for the importation of lamb pelts into the United States. Thus,  the importation of the lamb pelts by Keystone was prevented. Keystone refused to accept the goods as promised, and then, brought this action for breach of contract against Swift. The federal district court granted the buyer Keystone summary judgment, and Swift appealed, arguing that Swift, the seller, was entitled to summary judgment, or in the alternative, a remand for a trial on the facts.

Issue:

Should the loss due to the new government regulation that prevented delivery of the goods fall on Swift, the Canadian seller?

Answer:

No

Conclusion:

The appellate court held that under the agreement between the parties, the risk of loss passed to the buyer Keystone when the goods were loaded on the cars at Swift's plant. The court held that Swift performed its obligation when it offered to deliver the goods because, although Keystone had signified its refusal to accept them, Swift was not forced by law to do the useless act of shipping them. Therefore, the court reversed the grant of summary judgment for Keystone and directed that judgment be entered for Swift for the difference between the contract price and the sale price.

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