In accordance with their agreement, Merola shipped circuit boards to 3L via Federal Express, with the balance of $35,090 due on delivery in the form of a cashier’s check. The circuit boards arrived at 3L’s office and were paid for as agreed. However, upon inspection of the circuit boards, 3L discovered that the boards were damaged and were not as Merola had described. 3L immediately contacted Merola and notified her that the boards were unusable and that 3L was returning them. In response, Merola provided shipping instructions and an account number to be used for returning the goods. 3L followed the shipping instructions and the boards were returned to Merola’s address. Two weeks later, 3L sent an e-mail message to Merola regarding the refund for the boards. Merola responded that she had not received the returned boards. After Merola stopped responding to 3L’s inquiries, 3L filed suit to recover its $35,090 payment.

CASE QUESTIONS

1. Was this a shipment contract, or a destination contract? Explain.

2. Who bears the risk of loss in this case?