Jack purchased a new camper van from Sun Camper Sales, Inc. for $85,000. Jack then leaves the van with Sun Camper Sales, Inc. so that Sun Camper Sales, Inc. can weatherize it. Jack and Sun Camper Sales, Inc. agreed that Jack would pick up his new camper van the following Friday. While the camper van is sitting on the lot of Sun Camper Sales, Inc. and before the Friday Jack was to pick up his camper van, Sun Camper Sales, Inc. is hit by a tornado, and Jack's camper van is carried across the property by the tornado and suffers damages. The risk of loss is born by

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Question restatement: Jack bought a camper van for $85,000 and left it with Sun Camper Sales, Inc. to weatherize. They planned for Jack to pick it up the following Friday. Before pickup, a tornado damages the van on the seller’s lot. The issue is who bears the risk of loss.
Option 1: Neither Jack nor Sun Camper Sales, Inc. The risk of loss is generally allocated in a sale of goods by the UCC, and this option ignores the standard allocation rules between buyer and seller; it is unlikely to be correct unless there is a unique contract provision stating a mutual assumption of risk.
Option 2: Jack, who holds title to the van. Here, the scenario does not indicate that title has passed to Jack before delivery or pickup. Risk of loss in many sales passes with title or delivery, but since the van remained with the seller for weatherization and pickup was pending, advancing title transfer to Jack is not established, making this option less plausible.
Option 3: Both Jack and Sun Camper Sales, Inc. In some situations joint risk allocation can occur, but the usual framework is that risk passes based on the terms of delivery or title transfer, not a shared assumption without explicit agreement. Absent such an agreement, joint risk is unlikely.
Option 4: Sun Camper Sales, Inc. The typical rule under the Uniform Commercial Code (UCC) for goods held by a seller for delivery to the buyer is that the seller bears the risk of loss until the goods are delivered or tendered to the buyer (i.e., until possession is transferred). Since the van was still in the seller’s possession and weatherizing had not yet completed delivery to Jack, the risk of loss due to the tornado would ordinarily fall on the seller.
Further reasoning: The tornado occurred while the van was on the seller’s lot and before Jack took possession. Under UCC concepts of risk of loss, the seller generally bears risk while the goods are in the seller’s control and before proper delivery or tender to the buyer. Since Jack had not yet assumed physical possession or title transfer, the question points to Sun Camper Sales, Inc. as the party bearing risk at that moment.
Conclusion (informational, per the analysis above): The party bearing the risk of loss is Sun Camper Sales, Inc. because the van remained in the seller’s possession prior to delivery/tender, and risk typically passes with delivery or tender to the buyer under standard UCC rules. Therefore, option 4 is the correct characterization of risk allocation in this scenario.

ACCT:4300:0001 Fall25 Examination #1 - Accounting Ethics and Law- Requires Respondus LockDown Browser

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