Posted: April 17th, 2017

The Jolly Canning Co. in Hawaii agreed to sell 10,000 cases of canned green beans to the Merry Produce Co. in New York. The terms were FOB Bigport in Hawaii.

The Jolly Canning Co. in Hawaii agreed to sell 10,000 cases of canned green beans to the Merry Produce Co. in New York. The terms were FOB Bigport in Hawaii. The parties agreed that the governing rules were Incoterms 2010. Jolly, by mistake, delivered 10,000 cases of canned corn to the carrier in Bigport. Moreover, the bill of lading clearly stated that goods were canned corn. While the goods were in transit, they were damaged by seawater because of the carrier’s negligence. Jolly sues the carrier, but the carrier challenges Jolly’s standing (right) to sue. The carrier claims that the risk of loss had passed to Merry Produce (the consignee on the bill of lading) as soon as the goods had passed the ship’s rail. Is the carrier correct? Should Jolly’s suit be dismissed? Explain why or why not.