Passage of Risk and Incoterms

AuthorJack Michael Graves
Pages71-80
Rules for Allocating Risk of Loss or
Casualty to the Goods at Issue
The CISG employs specic rules governing the passing of risk, rather than
relying on the question of when title passes under applicable property laws.
In view of the substantial risk of casualty to goods—especially in transit—
the allocation of risk of loss at any given point in time is critically important
to the buyer and seller. A prudent party will typically insure against such
losses. However, to do so, the parties must know who bears the insurable
risk, and when. Inasmuch as domestic laws governing passage of title vary
a great deal, the CISG instead provides rules governing the passing of risk.
The CISG includes a general set of rules governing passage of risk, as well
as a specic rule applying them to circumstances involving nonconforming
goods. We begin with the general rules.
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PASSAGE OF RISK
AND INCOTERMS
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