Mary Orders a Dress for $1,000

Mary orders a dress for $1,000. The designer sends the wrong size. Mary doesn't inspect the dress on arrival and therefore doesn't discover the nonconformity until the day before she is to wear it to her first board meeting as president of Tri-State Engineering. She calls the designer and sends the dress back, but it is lost in the mail. Mary's insurance would cover $400 of the loss. The designer's insurance would cover $900. Who is liable?

A) Mary will bear the whole loss because she accepted the goods.
B) The designer will bear the whole loss because Mary returned the nonconforming goods.
C) Mary will owe $100, the designer $900.
D) The risk is Mary's to the extent of $400.