## Facts

- Buyers (the Berrys) contracted with a manufactured-home dealer (By the Sea Homes, Inc.) for purchase, delivery, and set-up/installation of a new manufactured home on the buyers’ lot.
- The agreement contemplated delivery of a home “suitable for occupancy,” including installation/finishing work such as carpet, railings, and sheetrock.
- The payment structure required 50% down and the balance upon delivery of the completed home.
- The written contract included an insurance-related clause stating the buyers would not be covered until an insurer accepted their application and containing language the seller argued shifted loss to the buyers before coverage took effect.
- The home was delivered in two sections, but installation and finishing were incomplete when a severe storm caused extensive water damage.
- At the time of the storm, the home lacked several items (including carpet, railings, and exterior siding) and was not suitable for occupancy.
- Neither party had insurance in force at the time of the loss.
- The buyers paid to repair the home through another contractor and sued for repair costs and lost wages.
- After a bench trial, the court dismissed claims against the individual defendants but entered judgment against the dealer on contract and Unlawful Trade Practices Act (UTPA) theories; the dealer appealed.

## Issues

1. Under Oregon’s UCC provisions, did the risk of loss pass to the buyers before the storm despite the seller’s continuing delivery/installation obligations and the home’s incomplete condition?
2. Did the contract’s insurance clause clearly and effectively shift risk of loss to the buyers before the seller tendered conforming, occupancy-ready goods?
3. Was the judgment imposing UTPA liability on the dealer supported, such that no reversible error occurred?

## Decision

- The Oregon Court of Appeals affirmed the judgment for the buyers.
- The court held the dealer, as a merchant-seller obligated to deliver and install, retained the risk of loss until tender of conforming goods meeting the contract’s “suitable for occupancy” requirement.
- The home’s incomplete, non-occupancy-ready condition meant no conforming tender had occurred when the storm hit.
- The insurance clause did not unambiguously reallocate risk of loss to the buyers before conforming tender.
- The court found no reversible error in the trial court’s ruling for the buyers, including on the UTPA theory.

## Legal Principles

- When a merchant seller contracts to deliver and install goods, risk of loss remains with the seller until tender of conforming goods at the buyer’s disposition, after completion of required acts making the goods conform.
- Goods are not “conforming” for tender and risk-of-loss purposes when they do not meet the contract’s completion/fitness requirements (e.g., not yet suitable for occupancy).
- Contract language shifting risk of loss away from the UCC default rule must be clear and explicit; ambiguity is construed against the drafter and will not displace the default allocation.
- An insurance-related clause focused on coverage timing or indemnity does not, without unmistakable terms, transfer UCC risk of loss before conforming tender.
- Conduct and representations that mislead consumers about responsibility for loss and insurance coverage may support liability under Oregon’s UTPA.

## Conclusion

The court held that the merchant-seller that agreed to deliver and install an occupancy-ready manufactured home bore the storm-loss risk because it had not tendered conforming goods, and the contract’s insurance clause did not clearly shift that risk to the buyers; the buyers’ judgment, including UTPA relief, was affirmed.


Berry v. Lucas, 210 Or. App. 334, 150 P.3d 424 (Or. Ct. App. 2006)