Under pre-UCC law, risk of loss commonly tracked title -- whoever owned the goods bore the loss if they were destroyed. Article 2 breaks that link. Risk of loss is instead governed by its own rules, keyed to delivery arrangements, shipping terms, and which party is in breach, regardless of who technically holds title at the moment of loss.

The allocation matters directly to who must still pay, and who must still perform, when goods are damaged or destroyed in transit or storage before delivery is complete. If risk has passed to the buyer, the buyer generally must pay the contract price even though the goods arrived damaged or never arrived at all, leaving the buyer to pursue any available insurance or a claim against the carrier.

UCC 2-509(1) distinguishes a shipment contract, where risk passes to the buyer once the seller delivers conforming goods to the carrier, from a destination contract, where risk does not pass until the goods reach the named destination.

Where the seller is a merchant, UCC 2-509(3) holds risk on the seller until the buyer actually receives the goods; where the seller is not a merchant, risk passes on tender of delivery. A separate provision, UCC 2-509(2), governs goods held by a bailee and passing without physical movement.

Parties routinely displace these defaults with express shipping terms. 'FOB shipping point' generally makes the contract a shipment contract, passing risk to the buyer at the seller's dock; 'FOB destination' generally makes it a destination contract, keeping risk on the seller until arrival. The specific term used, and the parties' course of dealing, controls over the bare default rule.

Risk shifts differently when a breach is in the picture. Under UCC 2-510, if the seller tenders nonconforming goods, risk remains on the seller until the defect is cured or the buyer accepts despite it -- a buyer is not stuck bearing loss on goods it was entitled to reject. Correspondingly, a buyer who wrongfully rejects conforming goods or wrongfully revokes acceptance can be treated as bearing risk from that point, to the extent the seller's insurance coverage is deficient.

Because risk of loss is a factual, event-anchored inquiry rather than a title lookup, disputes tend to turn on exactly when in the delivery sequence the loss occurred and exactly what the shipping terms said. Juricratic models risk of loss as a dial tied to the delivery-event timeline node, distinct from the title-transfer node, so a user can see how moving the loss event earlier or later in the shipment sequence -- or toggling nonconformity at the moment of loss -- shifts modeled exposure between the parties, alongside the related perfect-tender node.