84-2-509. Risk of loss in the absence of breach. (1) Where the contract requires or authorizes the seller to ship the goods by carrier:
(a) If it does not require the seller to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier even though the shipment is under reservation (K.S.A. 84-2-505, and amendments thereto); but
(b) if it does require the seller to deliver them at a particular destination and the goods are there duly tendered while in the possession of the carrier, the risk of loss passes to the buyer when the goods are there duly so tendered as to enable the buyer to take delivery.
(2) Where the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the buyer:
(a) On the buyer's receipt of possession or control of a negotiable document of title covering the goods; or
(b) on acknowledgment by the bailee of the buyer's right to possession of the goods; or
(c) after the buyer's receipt of possession or control of a nonnegotiable document of title or other direction to deliver in a record, as provided in subsection (4)(b) of K.S.A. 84-2-503, and amendments thereto.
(3) In any case not within subsection (1) or (2), the risk of loss passes to the buyer on the buyer's receipt of the goods if the seller is a merchant; otherwise the risk passes to the buyer on tender of delivery.
(4) The provisions of this section are subject to contrary agreement of the parties and to the provisions of this article on sale on approval (K.S.A. 84-2-327, and amendments thereto) and on effect of breach on risk of loss (K.S.A. 84-2-510, and amendments thereto).
History: L. 1965, ch. 564, § 74; L. 2007, ch. 90, § 56; July 1, 2008.
KANSAS COMMENT, 1996
1. This section states the general rules of Article 2 for allocating the risk of loss of the goods. The legal consequences of this risk allocation are significant. If the goods are destroyed and the risk of loss is on the seller, the seller must retender conforming goods or else breach the contract. If the risk of loss is on the buyer, the buyer must pay for the goods even though they have been lost or destroyed. See 84-2-709(1)(a). This section changes prior law: in sales of goods, risk of loss is no longer an incident of title. See Kansas Comment 1983 to this section. The effect on risk of loss of a breach of the underlying sales contract is governed by 84-2-510; risk of loss in sales on approval is addressed in 84-2-327.
2. The rules stated in this section are default rules. Subsection (4) makes clear that the parties can vary these rules by agreement. The parties may wholly reallocate the risk to one or the other, or they may divide it between them. 84-2-303.
3. The general rule is stated in subsection (3) and applies in all cases not involving a carrier or a bailee. If the seller is a merchant, risk of loss passes to the buyer when it takes physical possession of the goods. See 84-2-103(1)(c) (definition of receipt). If the seller is not a merchant, risk of loss passes to the buyer when the seller tenders delivery as defined in 84-2-503. For the definition of "merchant," see 84-2-104(1).
4. Subsection (1) deals with cases in which the seller under the contract is to ship the goods by carrier. Under a "shipment" contract, paragraph (1)(a) provides that risk of loss passes to the buyer when the goods are delivered to the carrier. Under a "destination" contract, paragraph (1)(b) provides that risk of loss passes to the buyer when the goods are tendered to the buyer. See also 84-2-503, 84-2-319, and 84-2-320.
5. Subsection (2) allocates the risk of loss when the goods are in the possession of a bailee when sold. Sellers are not bailees within the meaning of this subsection. The rules of this subsection generally correspond to the provisions of 84-2-503 on tender of delivery when goods are held by a bailee.
Law Review and Bar Journal References:
Paragraph (3) cited in discussing risk of loss under UCC, Patrick L. Baude, 13 K.L.R. 565, 568 (1965).
CASE ANNOTATIONS
1. Under a commercial tripartite finance leasing arrangement, after the supplier has fully performed all acts required under the contract, the agency-lessor assumes the risk of loss by fire. Enco Distributing, Inc. v. Commercial Cred. Equip. Corp., 6 Kan. App. 2d 205, 209, 214, 218, 627 P.2d 374.
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