Cengage Advantage Books: Law for Business 19th Edition by John Ashcroft,Katherine Ashcroft,Martha Patterson

Exercise 6

Rad Source Technologies Inc. sold a blood irradiation machine to the University of Illinois. It was to be shipped FOB Atlanta. After arriving in Atlanta, the irradiation unit was damaged in transit, so the university sued Rad Source. Rad Source had a general liability insurance policy from Colony National Insurance Company. Colony refused to defend the lawsuit, because the policy excluded damage from assumption of liability in a contract. Rad Source asked the court to declare that Colony had a duty to defend the suit and indemnify it because Rad Source had not assumed liability for shipment of the unit. The lawsuit hinged on what Rad Source's responsibility for the machine was during shipment. What was Rad Source's responsibility?