Risk of Loss

This lesson takes a look at the treatment of damaged and destroyed goods and how the U.C.C. allocates the risk of loss for such occurrences. Since casualties to goods do occur, there must be a mechanism for determining which party will suffer the loss. The party which will suffer the loss is said to bear the risk of loss of the goods. This lesson sets out the basic rules for determining which party bears the risk of loss in sales transactions in cases where there is no breach (UCC 2-509) and examines the effect of breach on the allocation of risk (UCC 2-510).

Learning Outcomes

On completion of the lesson, the student will be able to:

1. State the default rules for risk of loss in the absence of breach.
2. State the default rules for risk of loss when the seller or the buyer is in breach.
3. Demonstrate how the parties can change the default rules by agreement.