American Creosote Works v. Boland MacHine & Mfg. Co.
1948 La. LEXIS 903, 213 La. 834, 35 So.2d 749 (1948)
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Rule of Law:
When a contract for the sale of goods is explicitly made subject to the buyer's inspection and acceptance, title and the corresponding risk of loss do not pass to the buyer until the buyer has had the opportunity to inspect and has actually accepted the goods.
Facts:
- American Creosote Works agreed to sell Boland Machine & Manufacturing Company 24 specially treated creosoted fir pilings that had to conform to specific Navy specifications.
- The written contract explicitly stated the sale was 'subject to inspection and acceptance by the defendant' at the plaintiff's plant.
- The parties subsequently modified the agreement for the pilings to be loaded onto a barge provided by Boland at American Creosote's wharf for an additional fee.
- American Creosote notified Boland to have a barge at its wharf on the morning of August 21, 1943.
- Boland arranged for a barge, which was present at the specified time, and American Creosote completed loading the pilings onto it around 11 a.m.
- Before Boland or its agents could inspect, accept, or take possession of the pilings, a fire originated on American Creosote's wharf and spread to the barge, destroying the pilings.
Procedural Posture:
- American Creosote Works (plaintiff) sued Boland Machine & Manufacturing Company (defendant) in the district court to recover the purchase price of the pilings.
- The district court (trial court) entered a judgment in favor of the plaintiff.
- The defendant, Boland, appealed to the Court of Appeal for the Parish of Orleans.
- The Court of Appeal (intermediate appellate court) affirmed the judgment of the district court.
- The Supreme Court of Louisiana granted review of the case.
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Issue:
Does title to goods, and therefore the risk of loss, pass to a buyer when the goods are loaded onto the buyer's designated transport if the sales contract explicitly makes the transfer subject to the buyer's final inspection and acceptance?
Opinions:
Majority - Fournet, Justice
No, title and risk of loss do not pass to the buyer until the contractually required inspection and acceptance have occurred. The court reasoned that general civil code articles, which state a sale is perfected upon agreement of object and price, only apply if the contract 'purport[s] a transfer.' In this case, the contract did not purport an immediate transfer because of the specific and controlling provision requiring the buyer's inspection and acceptance. This explicit condition precedent overrides any general, pre-printed stipulations and demonstrates the parties' clear intent that ownership would not transfer until Boland had inspected and accepted the pilings. The court was further persuaded by American Creosote's own post-fire letter stating its liability ends only with 'completed delivery' and its internal procedure of requiring a signed delivery slip for acceptance, neither of which occurred. Therefore, delivery was never completed, title had not passed, and the risk of loss remained with the seller, American Creosote Works.
Analysis:
This decision clarifies that in contract law, specific, negotiated terms take precedence over general, boilerplate provisions. It establishes that 'delivery' for the purpose of passing title and risk of loss is not merely a physical act but a legal one, defined by the terms of the contract. The ruling emphasizes the principle of party autonomy, allowing buyers and sellers to contractually define the precise moment a sale is completed. For future cases, this precedent protects buyers who bargain for the right to inspect goods, ensuring they do not bear the risk of loss for non-conforming or damaged goods before they have had a chance to accept them.
