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Quote of the Day - If you don't find it in the index, look very carefully through the entire catalogue. - Sears, Roebuck, and Co., Consumer's Guide, 1897
Who Bears The Risk Of Loss Of Your Internet Catalog Order?
In short, you do. Brawn of California, the parent company of a number of companies, including International Male, charged its customers $1.48 for insurance to cover items that were lost in transit between its warehouse and the customer. One customer apparently tired of paying this fee, sued, claiming that the risk of loss belonged to the company until the item was delivered.
He thought the slight charge added up to an unfair business practice. The court, however, saw it differently, looking to the Commercial Code for some guidance. With its tongue planted firmly in its cheek, the court reported that commercial law wasn't quite applicable between an individual and a company, saying, "As the Commercial Code, and the cases cited there, typically involve armís-length sales between fairly sophisticated parties, the fit is not perfect."
The legal issue pivots on whether your purchase from the catalog company is a shipment contract or a destination contract, and whether it's a sale-on-approval or sale-on-return contract. The first component is easy to see. If the contract is based on shipment, then the buyer bears the risk of loss once the item is shipped from the catalog company. If, on the other hand, it's a destination contract, then the catalog company must get the item to the buyer, and assumes the risk of loss until the buyer receives the goods. It's a great law-school exam question.
Whether your purchase is a sale-on-approval or sale-on-return contract is another matter. Usually, if the sale is subject to approval, then the seller bears risk of loss until the buyer accepts. A sale-on-return contract is designed to facilitate resale of items. Remember, these laws were written for dealings between merchants, who don't generally take the time to write down the contractual provisions of each transaction. Here, the court noted, Brawn specifically dealt with this issue in its contract, and charged the insurance fee. The court presumed that if you bought goods, then you consented to those terms. End of story.
The tricky part came in the consequences. The trial court had found in favor of Jacq Wilson, the plaintiff who sued Brawn, and awarded him litigation expenses in the amount of $24,699.21 and attorney fees in the amount of $422,982.50 over this $1.48 dispute.
The appellate court, however, reversed, and Mr. Wilson recovered nothing, and instead gave Brawn its expenses on appeal.