Question

Kulak Farms, LLC in Florida grows and sells citrus fruits to grocers across the world. Corleone Family Grocers in New York contracts with Kulak Farms to buy 100 tons of oranges. The contract includes the terms "FAS Big Brad's Boat." Kulak Farms delivers the oranges to the harbor in Tampa for loading onto Big Brad's Boat. A hurricane approaches, but the captain, Little Timmy, has Big Brad's Boat sail anyway. The storm sinks Big Brad's Boat. Everyone survives but the cargo is lost. Kulak Farms sues Corleone Family Grocers after Corleone Family Grocers refuses to pay. How will the court rule?

Answer 1

FAS = free alongside ship is a clause if put into a contract, the buyer is required to deliver/bring the goods or products purchased alongside the ship. As soon as the seller brings the goods alongside the ship, it is seller's responsiblity to load it and insure it, at that moment the delivery is considered being made legally and all the risk transfers to the buyer.

Scenario :Kulak Farms delivers the oranges to the harbor for loading, so when kulak Farms did that, they have legally made the delivery and the risk is now transferred to Carleone family Grocers. Storm sinks the oranges but the delivery had already been made in legal aspect, hence court would rule that Carleone family grocers gave to pay.