what is the proper protocol

Very interesting thread and educational too. Previously I had only contemplated an item being damaged in transit, not lost or misplaced. I clearly underestimated the ingenuity of UPS and FedEx.

As to the debate on whether the seller or buyer bears the risk of loss in transit, I did a little research (by no means complete) and came up with the following:

1. Mitch2's observation that the item belongs to the seller (and therefore the seller bears the risk of loss) until the item is delivered is correct. Nhtran’s assertion on 07-21 that, unless otherwise negotiated, the BUYER bears the risk of loss during transportation is also (largely) correct. How can these apparently contradictory statements both be correct?

All states have adopted the Uniform Commercial Code, with some local variations. I have only the California version available, but I think the following provision is the same in most other states.

“Unless otherwise agreed:
(a) The place for delivery of goods is the seller’s place of business or, if he has none, his residence.”

Notwithstanding that the seller arranges transportation, he is deemed to have delivered the goods at his residence, so the buyer would bear the risk of loss in transit unless otherwise agreed.

2. So, have the parties agreed otherwise? That was the issue raised by Nhtran in his posts today. I agree with his statement that the contract with the carrier is separate from the contract with the buyer and does not place the risk of loss on the seller. I don’t agree with the rest of his observations.

a. "May be you should read the FAQ more carefully before you comment. There is a big difference between 'should' and 'must'. "Should" is aspirational but not required, "must" is required."

As far as risk of loss is concerned, I read the FAQ and it reads exactly as previously quoted by Bdgregory. The operative provision is

"The buyer and seller will determine which party is responsible for paying the shipping charges. Regardless of this determination all items shipped will be F.O.B.* destination. In other words it will ALWAYS be the responsibility of the seller to guarantee that items shipped will be as described and fully functional upon arrival."

The word “will” appears several times, but the word “should” does not appear at all.

b. "Audiogon 'customary practice' won't help anyone in a dispute."

If by "help" Nhtran means support your legal position, I disagree. I believe that the standard practices expressed in the FAQ become part of the contract between the seller and buyer, unless otherwise agreed. When the written portion of a contract (in this case, a classified ad and an exchange of e-mails) is silent on a particular subject, courts will usually refer (or defer) to practices that are customary in a trade or other association to which the contracting parties belong and under whose auspices they are conducting their transaction. Also, contracts for the sale of goods don’t have to be in writing to be legally binding - written contracts are just much easier to enforce because its harder to dispute their terms later on.

If you want evidence of the importance of trade practices in the law of contracts, look no further than the creation of the legal concept of a contract itself. In the 15th and early 16th centuries, English law courts refused to recognize the concept of a contact (that mutual promises were enforceable), so merchants formed an association with its own procedures that recognized and enforced contracts among its members, creating the “law merchant.” Concerned about competition from this early version of alternative dispute resolution, a few decades later the law courts decided that contracts were enforceable after all and adopted many of the rules and practices of the law merchant.

Tvad’s assertion that the guidelines expressed in the FAQ are not compulsory is also probably true, but that simply means that the seller and buyer are free to agree to something different from the guidelines. However, in the absence of a specific agreement varying from the guidelines, those parts of the guidelines that are affirmatively stated (not merely suggested) probably are part of the contract.

Don’t want to belabor the point, but I need to correct a statement I made earlier. I overstated the case when I said that contracts for the sale of goods don’t have to be in writing to be enforceable. The contract must be in writing if the sales price is $500 or greater. Sorry for that error.

Interestingly, the Commercial Code requires that the writing be “signed” by the party against whom enforcement is sought. You can put your signature on an e-mail, but most people don’t do it. Is typing your name enough? The Code was formulated in the 1960s and its provisions have not been updated to address changes caused by electronic commerce. Somewhere a court may have addressed this question, but that kind of research is beyond my quick and dirty search.

Notwithstanding my correction above, it is important to realize that, although a contract may have to be in writing, it does not have to state all its provisions in writing. Citing the Commercial Code again, the writing must be “sufficient to indicate that a contract for sale has been made between the parties.” Furthermore, “A writing is not insufficient because it omits or incorrectly states a term agreed upon . . .”

As to trade practices being incorporated into a contract, the Commercial Code provides::

“Terms with respect to which the confirmatory memoranda of the parties agree or which are otherwise set forth in a writing intended by the parties as a final expression of their agreement with respect to such terms as are included therein may not be contradicted by evidence of any prior agreement or of a contemporaneous oral agreement but may be explained or supplemented
(a) By course of dealing or usage of trade . . .”

Usage of trade is defined this way:

“A usage of trade is any practice or method of dealing having such regularity of observance in a place, vocation or trade as to justify an expectation that it will be observed with respect to the transaction in question. The existence and scope of such a usage are to be proved as facts. If it is established that such a usage is embodied in a written trade code or similar writing the interpretation of the writing is for the court.”

Finally, while it may be useful to be aware of the legal background, I sense that most AudiogoN members do not want to resort to strict legal technicalities in dealing with each other. We simply want to buy and sell stuff, not become contract lawyers. However, if you prefer to deal with an issue in a way that goes against the AudiogoN guidelines, it might be a good idea to say something about it, in a non-confrontational way, when communicating with a prospective buyer or seller.

Again, sorry for the incorrect information in my earlier post.

Bdgregory,

You are correct. I am making a legal argument (don't hate me I'm a lawyer). As evidenced by this thread, the expectations of most Audiogon members are clearly not in sync with contract law. If/when a dispute arises, most of these individuals are in for a rude awakening. Because I guarantee you, if the so called "Audiogon customary practice" diverges from contract law, contract law will win.

NT