Three key legal issues in any parcel shipment are the delivery obligations of the seller; when title passes from the seller to the buyer; and which party bears the risk of loss in transit. When the contract parties have not specifically defined their obligations in a written contract, for domestic U.S. shipments all states except for Louisiana have adopted a version of the Uniform Commercial Code (UCC) that determines these obligations based on whether the contract is a “shipment” or “destination” contract.

Every Parcel shipper should be familiar with the rules governing shipment and destination contracts, since the legal status of the contract often determines which contract party is responsible for any shipment loss, damage, theft, mis-delivery, or even liability to third parties arising from the shipment of the goods.

Article 2 of the UCC, governing the sale of goods, defines delivery obligations for a destination or shipment contract. Under a destination contract the seller is required to complete delivery to a particular, identifiable destination, such as the buyer’s place of business. The seller retains title to the goods, and the risk of loss, until delivery.

Most contracts are assumed to be “shipment contracts” under the UCC when the seller is required or authorized to send the goods to the buyer, but there is no specific agreement by the seller to deliver the goods at a named destination. In such circumstances, the seller’s obligations under UCC 2-504 are only to:

(a) put the goods in the possession of such a carrier and make such a contract for their transportation as may be reasonable having regard to the nature of the goods and other circumstances of the case;

(b) obtain and promptly deliver or tender in due form any document necessary to enable the buyer to obtain possession of the goods or otherwise required by the agreement or by usage of trade; and

(c) promptly notify the buyer of the shipment.

Under shipment contracts, the obligation of the seller to the buyer is complete when the seller tenders the goods to the carrier and complies with the other requirements of Section 2-504. Absent a breach of contract, title transfers to the buyer at the time and place of shipment, as does the risk of loss.

The failure to use specific and clear language in purchase or shipping orders can have significant legal consequences for sellers and buyers. Some courts have stated that if the express terms of a contract do not use the term “delivery” a contract is a shipment contract. Litigation can arise when other or ambiguous terms are used, such as “ship to” destination.

For example, in a case involving personal injuries caused by shipped explosives that ignited due to a truck rolling off a road the seller sought to deny liability claiming that its sale to the buyer was a shipment contract, while the seller claimed it was a destination contract. The court found that the purchase order stating “Ship via Vendor Truck” was ambiguous and required further fact-finding.

Such disputes can be avoided by entering into clear and specific contracts governing delivery obligations and the passing of title and risk. At a minimum, Parcel shippers need to pay careful attention to the UCC requirements for shipment and destination contracts and the preparation and wording of related documents.

All for now!

Andrew M. Danas is a Partner, Grove, Jaskiewicz and Cobert, LLP, Washington, D.C. Visit www.gjcobert.com or email adanas@danaslaw.com for more information. The information contained in this article is intended to be general background information. It does not constitute and should not be relied upon as legal advice. Readers should contact a qualified attorney should they have a specific legal question.

Previous Parcel Counsel columns, including those of regular Parcel Counsel Author, Brent Wm. Primus, JD, may be found in the “Content Library” on PARCELindustry.com. Your questions are also welcome at brent@primuslawoffice.com.

This article originally appeared in the November/December, 2025 issue of PARCEL.