Discuss the following problem: Jenkins agreed to purchase goods from Smith, F.O.B. Smith's plant. The goods in Smith's plant are separated and stenciled with Jenkins' name. Jenkins then telephones Smith and repudiates. The goods are subsequently destroyed by fire. Assume that Smith had no insurance on the goods. If Smith sues Jenkins for the purchase price, what result? Use UCC provisions to support your answer/analysis. Cite the specific sections of the UCC that support your argument. In this case, Smith could file a lawsuit against Jenkins for the purchase price for goods purchase with FOB Smith's plant as the goods were separated and stenciled with Jenkins' name assuming the goods were conforming, and Smith fulfilled responsibilities as agreed. According to the UCC 2-510(3) Effect of Breach on Risk of Loss, where the buyer as to conforming goods already identified to the contract for sale repudiates before risk of loss has passed to him, the seller may to the extent of any deficiency in his effective insurance coverage treat the risk of loss as resting on the buyer for a commercially reasonable time. Since Smith did not have insurance, he was able to pass the loss to Jenkins who repudiated before the risk of loss had passed to him. Additionally, the agreement for this purchase was FOB at Smith's plant so Jenkins would pay for the goods, the carriage and insure against loss during transit. According to UCC 2-213 (1) (a) when the term is F.O.B. the place of shipment, Smith must at that place ship the goods in the manner provided in this Article and bear the expense and risk of putting them into the possession of the carrier. Additionally, UCC 2-509 (1) (b) the risk of loss under a destination contract passes to Jenkins when the goods are duly tendered to Jenkins at the designated destination which was Smith's plant in a manner that enables Jenkins to take delivery. Contracting parties should be expected to perform once an agreement is made. And if a party does decide to pull out, there should be consequences. Otherwise, what worth does a contract have? The UCC provides rules to ensure a party will benefit from a bargain, regardless of whether the other side performs. What the UCC does not generally allow is for a party to benefit from the other party's breach - the aggrieved party cannot make a windfall. In this scenario, section 2-510 ensures Smith will end up in the same place he would have been if Jenkins had not repudiated. Smith will realize the value of the sale and only the value of the sale. That is why the provision about insurance is included. Smith cannot collect on the insurance (if he had it) AND from collect from Jenkins. Furthermore, the "commercially reasonable time" provision also places a clock on Smith to act. If Jenkins did not repudiate, the goods would have been moved away from Smith's plant. After the time they would have been
