6 Risk of loss
Goods sold in an international transaction frequently require transportation over a substantial distance and involve multiple methods of carriage, or “multimodal transport.” The goods may leave the seller’s plant by truck for loading on a ship and then be transported to the buyer’s jurisdiction, where they are loaded on another truck to be brought to the buyer’s plant. Transportation over distances and by multiple carriers presents opportunities for goods to be lost, damaged, destroyed, or stolen. When such unfortunate events materialize, parties to the transaction will want to know who, as between the buyer and the seller, bears the risk of the loss. Ultimately, an independent carrier in possession of the goods at the time of the loss may bear the risk. But even then, the buyer and the seller will need to know which of them is responsible for pursuing recovery against the carrier.
Two principles inform the efficient allocation of risk of loss in international transactions. First, all parties would presumably agree that losses are costly, both in terms of replacing the lost goods and in terms of pursuing claims for them. In order to minimize the costs related to losses, therefore, the risk should be placed on the party who is in the best position to prevent them from materializing in the first instance or to insure against losses that do occur. That is usually the person who is in possession or control of the goods. It is not necessarily the owner of the goods....
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