In March 2002,a retailer contracted to buy 200 chairs from a manufacturer.The contract terms called for full payment to be made by April 1,with delivery to be made by April 20.This is an F.O.B.destination contract.In the warehouse,the seller marked these 200 chairs as sold to this buyer on March 29.The buyer failed to make timely payment by April 1.What effect does the buyer's failure to make payment have on risk of loss?
A) It has no effect because the contract shipping terms control risk of loss.
B) It has no effect because the goods are still in the warehouse of the seller.
C) It will immediately and permanently place the risk of loss on the buyer.
D) It will immediately place the risk of loss on the buyer for a commercially reasonable time.
E) It has no effect because the risk of loss shifted to the buyer upon the formation of the contract.

Question

Quizplus · Accepted Answer

The contract is an F.O.B. destination contract. According to Article 2 of the Uniform Commercial Code, if the buyer fails to pay for the goods upon delivery, the seller has the right to withhold delivery. However, if the buyer has received the goods and fails to pay, the seller may reclaim the goods, or if the seller fails to reclaim the goods, the risk of loss shifts back to the buyer for a commercially reasonable time. Therefore, the buyer's failure to make timely payment will immediately place the risk of loss on the buyer for a commercially reasonable time.

In March 2002,a Retailer Contracted to Buy 200 Chairs from a Manufacturer.The