In legal terms, “risk of loss” refers to the responsibility for bearing the financial burden when goods are damaged, destroyed, or lost during a commercial transaction, typically involving the sale or transfer of goods. The allocation of this risk is determined by the terms of the contract between the parties involved. In most cases, the Uniform Commercial Code (UCC) provides guidelines for determining when the risk of loss transfers from the seller to the buyer. These guidelines consider factors such as the delivery terms, the nature of the goods, and the actions or agreements of the parties involved. Understanding the risk of loss is crucial for parties to protect their interests and allocate responsibilities effectively in commercial transactions.
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This glossary post was last updated: 29th March 2024.
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