## Facts

- A.M. Knitwear Corp. (seller) agreed to sell All America Export-Import Corp. (buyer) several thousand pounds of polyester yarn for export shipment.
- The buyer’s purchase order stated “FOB PLANT PER LB. $1.35” and included instructions indicating pickup from the seller’s plant to a pier for overseas shipment.
- The buyer arranged for a container and sent an empty container to the seller’s plant through a trucker.
- The seller loaded cartons of yarn into the container and notified the buyer that the shipment was ready for pickup.
- Before the buyer’s trucker returned, an impostor appeared, signed for the container, and drove away; the container and yarn were never recovered.
- The buyer stopped payment on its check; the seller sued for the contract price for “goods sold and delivered.”

## Issues

1. Whether, under an “FOB PLANT” term and UCC risk-of-loss rules, the seller shifted the risk of loss to the buyer by loading the goods into the buyer’s container at the seller’s plant and notifying the buyer.
2. Whether “FOB PLANT” on the purchase order operated as a delivery term requiring delivery to a carrier, rather than merely a price term.

## Decision

- The New York Court of Appeals affirmed the Appellate Division’s grant of summary judgment to the buyer.
- “FOB PLANT” was treated as a delivery term under the UCC, not merely a price term, regardless of where it appeared on the form.
- The seller did not complete the required delivery because the goods were not delivered to the carrier as required by the shipment term and the UCC.
- No express agreement modified the default rule to make “loading and notice” equivalent to delivery to a carrier.
- Risk of loss (and responsibility for the stolen yarn) remained with the seller; the seller could not recover the price from the buyer.

## Legal Principles

- Under UCC § 2-319, an “FOB [place of shipment]” term is a delivery term that obligates the seller to deliver goods to the carrier at the named place.
- Under UCC § 2-509(1)(a), in a shipment contract risk of loss shifts to the buyer when the goods are delivered to the carrier, not when they are merely prepared or loaded for pickup.
- Under UCC § 2-401(2), passage of title generally depends on the seller’s completion of performance regarding delivery; absent delivery to the carrier, title and risk may remain with the seller.
- Loading goods into a container at the seller’s premises and notifying the buyer does not, without an express agreement, substitute for delivery to a carrier required to shift risk of loss.
- Parties may reallocate risk by agreement, but an alteration of the UCC’s default allocation requires clear contractual language rather than inference from cooperative shipping arrangements.

## Conclusion

Because the contract’s “FOB PLANT” term required delivery to a carrier to shift risk, and the yarn was stolen before such delivery occurred and without an express modification of that requirement, the seller bore the loss and could not collect the contract price from the buyer.


A.M. Knitwear Corp. v. All Am. Export-Imp. Corp., 41 N.Y.2d 14 (1976)