Delapaz Motors receives 10 motorcycles from a manufacturer on a sale or return basis.Delapaz pays $5,000 for each vehicle.Delapaz sells six motorcycles within a reasonable time.Two of the remaining motorcycles are damaged from a fire accident.Which of the following is true in this case?

Question

Quizplus · Accepted Answer

In a sale or return basis, the risk of loss remains with the seller (in this case, the manufacturer) until the buyer (in this case, Delapaz) accepts and keeps possession of the goods. Delapaz accepted and sold six motorcycles, but the two damaged motorcycles were still in the possession of Delapaz when the fire accident occurred. Therefore, Delapaz cannot recover the value of the damaged vehicles from the manufacturer.

Delapaz Motors Receives 10 Motorcycles from a Manufacturer on a Sale