If a shipment contract authorizes shipment by carrier, when does the risk of loss shift from the seller to the buyer?

• A. When the contract is signed.
• B. Once the goods are delivered to the carrier.
• C. Upon payment by the buyer.
• D. At the time of sale.

Answer: (B)

In a shipment contract, the seller’s duty is to get the goods to a carrier for transport to the buyer. The risk of loss passes from seller to buyer at the moment the goods are delivered to the carrier, not earlier. This means if the goods are damaged or lost in transit after delivery to the carrier, the buyer bears the loss. The other moments don’t determine risk transfer here: signing the contract happens before performance, payment by the buyer isn’t the point at which risk shifts, and the risk doesn’t wait until a sale is completed if the seller has already delivered to the carrier. For a shipment contract this transfer-at-delivery-to-carrier rule is the standard.