In a shipment contract, risk of loss passes to the buyer when:

• A. A The goods are delivered to the carrier
• B. B The goods are delivered to the named location
• C. C The contract is formed
• D. D Payment is made

Answer: (A)

The main idea is that in a shipment contract, the risk of loss passes to the buyer once the seller delivers the goods to a carrier for shipment. Once the goods are handed over to the carrier, the buyer bears any loss or damage that occurs in transit, even if the goods haven’t yet reached the destination. The seller’s job is to ship by a carrier and contract for transportation, not to deliver to a specific destination himself.

Delivering to the named location would be characteristic of a destination contract, where risk passes when the goods are tendered at the agreed destination. The moment the contract is formed or payment is made does not determine when risk shifts in a shipment contract.