In Re Kiddie Gym Systems

IN RE KIDDIE GYM SYSTEMS1

Mr. Jerry Martin Kiddie-Gym Systems

Re: Poly-Cast, Inc.

Dear Mr. Martin:

This letter is to inform you of our opinion regarding who will bear the risk of loss for the accidental destruction of the playground equipment at Bradley Center Mall, and whether you are responsible for the shipping costs of the playground equipment.

As between Kiddie-Gym Systems and Cornet, Inc., who bears the risk of loss for the playground equipment?

Cornet will bear the risk of loss.

The contract between you and Cornet is governed by the Franklin Commercial Code because it is a contract for the sale of goods. FCC sec 2102. Goods are things which are movable at the time of identification to the contract for sale. FCC sec. 2105. The contract is for playground equipment, which is movable.

FCC does not apply to contracts solely for the sale of services. FCC sec 2102. Your contract is one in which goods and services are mixed; you are to install the playground equipment as well as supply the equipment. Whether the FCC applies to a mixed contract of goods and services is addressed by the Franklin Court of Appeal in Coakley Inc v. Washington Plate Glass Co. "[I]n situations where the contract is a mixed contract involving the sale of goods and the rendition of services, it will be deemed that the contract comes within the sales division of the Franklin Commercial Code if the value of the goods being furnished under the contract exceeds one half of the total contract price."

Your contract with Cornet totals $120,000, as shown in your contract with Cornet. The value of the playground equipment is $75,000, as shown by your contract with Poly-Cast. The value of the goods being furnished exceeds one half of the contract price, so the FCC applies.

Risk of loss for the equipment passes to the buyer, in the absence of breach, on the buyer's receipt of goods if the seller is a merchant. FCC sec 2509. A merchant is a person who deals in goods of the kind involved in the transaction. FCC sec 2104. You are in the business of selling playground equipment, so you are a merchant of playground equipment.

1 Copyright 2008 Daniel Wilson. Where you in breach? Your crews had installed the equipment on July 22. Your crew removed the construction barriers. All that was left was a final site check and a tune-up. Interview with jerry Martin. You went to the job site the next day to do the site check and found children playing on the equipment. The equipment was destroyed by fire the next day. You are not in breach of the contract because the final tune-up is now impossible to perform. Interview with Martin.

Cornet's employee had allowed children to use the playground equipment. Cornet had physical possession and use of the equipment. This is receipt of the goods. Franklin Court of Appeal Hughes v. Al Green. Green emphasizes that risk of loss does not depend on transfer of title "[u]nless the contract specifically provides that risk of loss depends on the locus of title, it is irrelevant where title resides." Hughes v. Green.

Although title had probably not passed to Cornet at the time of the fire, the risk of loss had passed. Cornet bears the risk of loss.

IS KIDDIE-GYM SYSTEMS RESPONSIBLE FOR SHIPPING COSTS?

Poly-Cast is responsible for the shipping costs.

Your Purchase Order to Poly-Cast was an offer to buy the three sets of playground equipment at a price of $25,000 per unit, all-inclusive. Purchase Order, May 29. This indicates Poly-Cast was to pay shipping costs. Poly-Cast replied with an Acknowledgement of Order, June 9. The fine print provided "[a]ll shipments subject to shipping and handling" This was an acceptance of your offer, which contains a differing term. Then Ploy-Cast billed you for $2,500 for delivery of one unit, 10% of the purchase price, July 25.

Between merchants the delivery term in Poly-Casts Acknowledgement Order is a differing term that becomes part of the contract unless it materially alters the contract, or your offer was made expressly conditional on its terms, or you object to the additional terms within a reasonable time. FCC sec 2-207. As explained above you are a merchant in playground equipment because you install such equipment. Poly-Cast is a merchant in playground equipment because it manufactures and distributes such equipment. Interview with Martin. An additional term materially alters the contract if it would result in surprise or hardship. Franklin Court of Appeal Album Graphics v. Craig Adhesive Company.

You did not notice the delivery term on the Acknowledgement until you were billed, so you did not object within a reasonable time.

However, you told us that you could have had your driver pick up the equipment and that you thought the heavy protective packaging was unnecessary. Finally, if you have to pay shipping costs you will break even or take a small loss on the deal. This constitutes both hardship and surprise. The shipping term does not become part of the contract and you are not obligated to pay them.

NOTE TO STUDENTS. THERE ARE TWO POINTS FOR APPLYING 2-207 (3) WHICH I REFUSE TO ADDRESS BECAUSE IT IS AN INCORRECT APPLICATION OF THAT SUBSECTION. STUDENT SHOULD APPLY IT BECAUSE IT IS IN ALBUM GRAPHICS.