Community Hospital in Atlanta entered into a contract to buy delicate lab equipment from D & D Company in Denver.The contract states shipping terms as FOB,Denver.While in transit the equipment was damaged beyond repair by the carrier,Fly-by-Nite Air Lines.The carrier is in weak financial condition and refused to pay for the equipment.In this case:

Question

Quizplus · Accepted Answer

The shipping terms FOB (Free on Board) Denver mean that the risk of loss or damage to the equipment passes from D & D Company to Community Hospital when the equipment is loaded onto the carrier. Therefore, Community Hospital has the risk of loss in this situation and is responsible for filing a claim with the carrier for the damage. D & D Company is not liable for the damage since they fulfilled their obligation by delivering the equipment to the carrier in Denver.

Community Hospital in Atlanta Entered into a Contract to Buy