Design, Inc., in Newport, Rhode Island, entered into a contract with Buenavista,

Question

Design, Inc., in Newport, Rhode Island, entered into a contract with Buenavista, S.A. in Barcelona, Spain, to buy 1,000 sheets of stained glass. The contract contained a delivery clause that read “FOB Hasta Luego.” The contract also stated that it was to be interpreted in accordance with Incoterms. While the glass was being loaded onto the ship (Hasta Luego), one of the crates slipped from the loading mechanism and landed in the water before it crossed the ship’s rail. Who bears the risk of loss of the glass? Would the answer change if the contract was governed by the UCC?

Explanation / Answer

The contract stated that the FOB Hasta Luego, delivery terms should be interpreted according to the Incoterms. The FOB term (Free on Board (named port of shipment:Hasta Luego)) is situated in the F Group Shipment Contract of the Incoterms 2000.According to this term:-

Sellers’s responsibilities: Load the goods on board the ship specified by thebuyer within the time called for in the contract. Pay costs of loading. Obtainexport license.-

Buyer’s Responsibilities: Choose ocean carrier and pay freight charges. Entergoods through customs

Passage of Risk: When the goods cross the ship’s rail at port of shipment.Since the crate slipped from the loading mechanism and landed in the water before crossing the ship. It would be counted as sellers mistake and he would bear the risk of loss.

No.

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