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A Case on Who Bears Risk of Loss - the Seller or the Buyer?

The Supreme Court of Prince Edward Island has issued a new decision that addresses the issue of which party should bear the cost of goods that spoil at sea (W.D. Potato Limited v. Visser Potato Ltd., 2018 PESC 51).

As you might expect from PEI, the case concerned a load of potatoes. The facts are easy. The seller of those potatoes was W.D Potato Ltd. ("WD"), a potato broker. The buyer was Visser Potato Ltd. ("Visser"), another broker, who needed additional potatoes to fulfill an order to a client in Argentina. When the potatoes arrived in Argentina, they were discovered to be rotten, having apparently spoiled at sea. For unknown reasons the shipping company that carried the potatoes was not a party to the lawsuit. The issue the court was asked to decide was who, as between WD and Visser, should swallow the loss. The contract between the parties (which was a basic letter) included the term "FOB farm".

The court ultimately sided with WD concluding that:

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