Shared Imaging, an American corporation, entered into a contract for the purchase of an MRI scanner with Neuromed, a German corporation. According to the complaint, the MRI was loaded aboard the vessel Atlantic Carrier undamaged and in good working order. When it reached its destination of Calumet City, Illinois, it had been damaged and was in need of extensive repair, which led the plaintiffs to conclude that the MRI had been damaged in transit.

The one-page contract of sale contains nine headings, including: “Product”;

“Delivery Terms”; “Payment Terms”; “Disclaimer”; and “Applicable Law.”

Under “Product,” the contract specifies the “system will be delivered cold and fully functional.” Under “Delivery Terms” it states, “CIF New York Seaport, the buyer will arrange and pay for customs clearance as well as transport to Calumet City.” In addition, under “Disclaimer” it states, “system including all accessories and options remain the property of Neuromed till complete payment has been received.” The plaintiff argued that this last ítem negated the CIF clause and that, because Neuromed retained title, Neuromed assumed the risk of loss in transit.

CASE QUESTIONS

1. Who bears the risk of loss if the court finds that the contract was indeed a CIF contract?

2. Who should bear the risk of loss in this case and why?