Also known as: casualty to the identified goods · risk of loss · UCC 2-613
Written by attorneys · grounded in primary & secondary sources — see below
A statutory rule in sales contracts providing that when goods identified to the contract suffer casualty without fault of either party before risk of loss passes to the buyer the contract is avoided if the loss is total. If the loss is partial or the goods have deteriorated so as no longer to conform the buyer may accept the goods with an allowance or treat the contract as avoided.
Chloe Chen contracted to buy a specific vintage tractor identified in the agreement from Craig Caldwell. Before delivery and while the tractor remained on Caldwell's farm a fire destroyed it through no fault of either party. Because the loss was total and risk of loss had not yet passed Chen may treat the contract as avoided and has no obligation to pay the price.
Clifford Cox agreed to purchase a particular shipment of custom lumber identified to the contract from Cade Carpenter. A storm damaged part of the lumber before risk passed. Cox may accept the remaining conforming portion with a price reduction or avoid the entire contract under the casualty rule.
Connor Clark contracted for a specific lot of perishable produce identified when the contract was made. The produce deteriorated without fault of either party before risk of loss passed. Clark may accept the deteriorated goods with an appropriate allowance or avoid the contract entirely.
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Christian Coleman sold identified manufacturing equipment to Copperfield Mining under a contract that left risk of loss with the seller. Before delivery a flood destroyed the equipment. Because the goods were identified and the casualty occurred before risk passed the contract is avoided and Coleman bears the loss.
Cascade Manufacturing contracted to sell specially fabricated parts identified to the contract for Central Dynamics. An unforeseen accident destroyed the parts before risk passed. The contract is avoided and neither party owes further performance because the casualty rule applies to the identified goods.
The rule applies only when the contract requires goods that were identified when the contract was made and the goods suffer casualty without fault of either party before risk of loss passes to the buyer.
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The buyer may accept the goods with an allowance reflecting the deterioration or treat the contract as avoided and recover any payments made.
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No. Once risk of loss passes the buyer bears the loss even if the goods are destroyed and must still pay the contract price.
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The goods must be identified when the contract is made for the rule to apply. Generic goods not yet identified do not trigger avoidance under this provision.
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…particularly economic uncertainties. Where parties to a contract deliberately and expressly undertake to allocate the risk of loss attendant on those uncertainties between themselves or where they enter a contract of a customary kind which by common understanding, sense, and legal doctrine has the affect of allocating…