In Business Scenario problem #21-2 of your textbook in Chapter 21, Sikora goes into Carson's retail clothing store, purchases a suit for $190, and then leaves the suit to be altered at Carson's. If the suit is destroyed in a fire at Carson's, which is not the fault of Carson's (the fire is accidental), as between Carson's and Sikora, who suffers the risk of loss of the suit?

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First, note the setup: Sikora goes into Carson's, buys a suit for $190, and leaves the suit at Carson's to be altered. A fire at Carson's destroys the suit, and the question asks who bears the risk of loss when the fire occurs.
Option 1: Carson's. If the risk of loss remained with the seller until performance is complete (e.g., alteration finished and goods delivered), then Carson's would bear the loss. However, in many retail scenarios where the buyer has already paid and the goods are identified to the contract, risk can transfer to the buyer even if the goods are still in the seller’s hands for processing, depending on when title and risk pass under the contract terms or the applicable code.
Option 2: Sikora. Since Sikora purchased the suit and the item was identified to the contract, the risk of loss may pass to Sikora once title passes or once the goods are identified to the contract and delivery stumbles into the alteration stage. In this scenario, even though the alteration is being done at Carson’s location, Sikora has a secured interest by virtue of ownership and payment, which can place the risk of loss on Sikora if the contract or applicable law assigns risk to the buyer upon purchase/identification, not upon final delivery. The bombshell here is that the arrangement for alteration can complicate risk allocation: if the contract terms or the governing sales law place the risk on the buyer after sale and identification, then Sikora bears the loss.
Option 3: Both Carson's and Sikora. If both parties share risk due to partial performance or a bailment-for-further-processing arrangement, one could imagine risk dividing. But typical commercial practice does not assign partial risk to both parties in a single transaction unless the contract explicitly provides for joint risk during processing. Without such an explicit clause, this joint allocation is unlikely.
Option 4: Neither Carson's nor Sikora. This would imply a third party bears the loss (e.g., a carrier or bailor/bailee rule). Here there is no carrier involved and the question centers on risk between the seller and purchaser during processing at the seller’s premises, so assigning risk to neither is inconsistent with standard risk-of-loss principles in a sale-transaction scenario.
In sum, the core idea is to analyze the moment at which risk passes from seller to buyer and how the alteration arrangement affects that transfer. If the arrangement or applicable law places the risk on Sikora after the sale and identification to the contract, even while the seller retains the physical possession for alteration, then Sikora would bear the loss. Conversely, if risk remained with Carson’s until completion of alteration and delivery, Carson’s would bear it. The question’s framing aligns with the interpretation that Sikora bears the risk in this particular setup, thus making Option 2 the correct choice under the given premise.

ACCT:4300:0001 Fall25 Complete: Quiz #7 - Accounting Ethics and Law

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