Legal Definitions - Shipment Contract

A shipment contract is a type of agreement between a buyer and seller that determines who bears the risk of loss if goods are lost or damaged during shipment. This type of contract is governed by Article 2 of the Uniform Commercial Code.

Under a shipment contract, the buyer assumes the risk of loss for the goods once they are in transit, but before they are actually received. The seller's responsibility is to get the goods to a common carrier and make arrangements for delivery to the buyer. If any loss occurs during shipment, the buyer is responsible for the costs.

For example, if a buyer in New York purchases a shipment of goods from a seller in California, and they agree to a shipment contract, the seller's only responsibility is to get the goods to a common carrier in California. Once the goods are in transit, the buyer assumes the risk of loss until they are received in New York.

Another example could be a company that regularly ships products to customers. They may have a standard shipment contract that outlines the responsibilities of both parties in the event of loss or damage during shipment.