PlastiCo. contracted to buy 10,000 gallons of a chemical from Natural Chemicals Ltd. The chemical still had to be refined at the time the contract was made. Once it was refined, Natural had it pumped into a 500-gallon drum and the drums loaded onto a truck owned by Heavy Haulage Inc., a common carrier. The truck pulled out of Natural's yard and was struck by a falling boulder on the mountain road nearby, sending the truck and chemical down the cliff. Almost all of the barrels were damaged and the chemicals leaked into the ground, causing massive environmental damage and requiring a $2 billion dollar clean-up.

A. Whose losses are the barrels and chemicals?

B. Which rule applies?

C. Explain the reason for your answer in A and B.

D. Does Caveat Emptor apply to this case? Explain.