Cengage Advantage Books: Business Law 9th Edition by Arnold Goldman ,William Sigismond

Exercise 16

Ally contracted in writing with Farmer's Equipment Co. to purchase a tractor and trade in his old one (sell it to the dealer). He was to keep the old tractor for his use until the new one was ready for pick up, but turn over the certificate of title (ownership) immediately to Farmers, which he did. Nothing in the contract stated how risk of loss would be handled for the old tractor in case of damage or destruction while in Ally's possession. It so happened that while still in Ally's possession, the old tractor caught fire and was destroyed. Ally then sued, ordering Farmers to bear the loss of the trade-in because title had passed before the tractor was destroyed. The court ruled against Ally, claiming that he must bear the loss because the tractor was in his possession when the fire occurred. Ally appealed but also lost on appeal. Do you agree with the appeals court decision? (SC of ND 283 N.W. 2d)