Cey Corp. entered into a contract to sell parts to Deck, Ltd.
The contract provided that the goods would be shipped “FOB
Cey’s warehouse.” Cey shipped parts different from those specified
in the contract. Deck rejected the parts. A few hours after
Deck informed Cey that the parts were rejected, they were destroyed
by fire in Deck’s warehouse. Cey believed that the parts
were conforming to the contract. Which of the following statements
is correct?

Regardless of whether the parts were conforming,
Deck will bear the loss because the contract was a
shipment contract.
If the parts were nonconforming, Deck had the right to
reject them, but the risk of loss remains with Deck until
Cey takes possession of the parts.
If the parts were conforming, risk of loss does not pass
to Deck until a reasonable period of time after they are
delivered to Deck.
If the parts were nonconforming, Cey will bear the risk
of loss, even though the contract was a shipment contract.

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