Destination Contract Law and Legal Definition

Article 2 of the Uniform Commercial Code states that a destination contract is one way in which buyer and seller could contract to allocate risk of loss between buyer and seller when goods or lost or damaged before the buyer obtains them from the seller and neither buyer nor seller is to be blamed for the loss. In such a situation, the seller bears the risk of loss in a destination contract. Because, the seller has to get the goods that are to be shipped to the buyer. If the goods are lost or destroyed before reaching the buyer, the seller will be responsible for any costs. Under a destination contract, the shipment is free on board and any location but where the seller is located.