A company enters into a contract to purchase a certain quantity of goods from another company during thefollowing month

Business Apr 27, 2021

A company enters into a contract to purchase a certain quantity of goods from another company during thefollowing month. At this point, would a liability exist? Explain why or why not.

Expert Solution

Answer:

although this type of contract can be enforceable, no liability would exist for the purchasing company until the risk of loss had passed from the seller to the buyer.

Unless the contract provides otherwise, the risk of loss does not transfer until the seller tenders or delivers the goods to the buyer.

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