Legal Question in Business Law in California

The correct answer depends upon what the contract might say about this. If the contract is silent on the subject, the provisions of the Uniform Commercial Code would apply, and as I understand the Code, when goods are sold FOB the buyer's address, the seller assumes all risk of damage in transit, and the buyer may reject damaged goods without cost or expense. California Commercial Code, section 2319. Therefore, unless the contract provides otherwise, the buyer is entitled to a full refund and the seller must pay the cost of returning the rejected goods (if they are to be returned).

The seller may be able to make a claim against the carrier for damage in transit. Common carriers are traditionally 100% liable for any loss and damage between origin and destination.

The buyer has a responsibility to inspect the goods promptly upon arrival and to notify the seller of rejection as soon as possible.

I again remind you to look at the terms of sale carefully for any language modifying the basic terms of the law of commerce. Many seller-drafted contracts shift the risk.