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I recently had a package misdelivered/lost by USPS, and the small e-commerce retailer I purchased from refused to refund or replace, pointing to their “refund policy” which does include a line saying they aren’t responsible for lost mail. Their “shipping policy” made no mention of this.

It was a cheap item, so no big deal, but it prompted me to do some “research” online and every article I could find on the topic said that lost packages are the seller’s responsibility to replace or refund. This idea was repeated over and over, for US and international situations. None of them, however, cited a source.

What basis is there in US law for this idea? Is it accurate? Can it be contracted away by fine print in a “refunds policy,” or is that prohibited?

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    Not an answer, since I can't guarantee that this applies to the US as well, but sale contracts pretty much work the same worldwide: there is a defined moment when the goods are handed over from the seller to the buyer. This can happen through an agent, and the shipping service is understood to be an agent of the seller, as that is who the shipping service enters into a contract with (at least in B2C transactions; B2B sometimes has handover defined at some warehouse, with a shipping service picking up on behalf of the buyer). Oct 20, 2021 at 6:05
  • Related, but not duplicate: law.stackexchange.com/q/56782/10334
    – Trish
    Oct 20, 2021 at 6:49
  • "every article I could find on the topic said that lost packages are the seller’s responsibility to replace or refund." As noted in the answers, this is not accurate.
    – ohwilleke
    Oct 20, 2021 at 15:41

2 Answers 2

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UCC section 2-509 is the law pretty much everywhere in the United States, and it addresses your situation:

Where the contract requires or authorizes the seller to ship the goods by carrier ... if it does not require him to deliver them at a particular destination, the risk of loss passes to the buyer when the goods are duly delivered to the carrier.

Although the statutory language is a bit convoluted, it all boils down to whether you have a shipment contract or a destination contract, i.e., whether the contract calls for the seller to ship something to you or deliver something to you.

Because you asked for a shipment contract, the risk of loss shifts to the buyer upon delivery to the shipping carrier (USPS). If the package is destroyed in transit, that becomes a problem for you and USPS to sort out. If you didn't purchase insurance for the shipment, you're probably screwed.

Note that because this is the statutory default, the seller didn't "contract away" anything; instead, it alerted you to what was already true, giving you an opportunity to contract around the rule, purchase insurance, or otherwise mitigate the risk you were taking on.

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    This is surprising because it seems incompatible with how things work in real life. It is the seller who contracts with the shipping carrier, not the buyer, and so only the seller has the opportunity to purchase insurance, or to make a claim on that insurance. You say "if you didn't purchase insurance" but AFAIK there is no practical way the buyer could have done so. Is this a Catch-22? Oct 20, 2021 at 14:00
  • @brhans Yes. Corrected.
    – bdb484
    Oct 20, 2021 at 14:17
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    @NateEldredge Purchasing insurance is part of the process of contracting around this risk. In most cases where it happens -- in my experience, at least -- the buyer pays an additional amount if they want insurance, and the seller insures the shipment, but with the buyer as the beneficiary of the policy. Sometimes the seller proactively offers it; sometimes the buyer has to ask.
    – bdb484
    Oct 20, 2021 at 14:17
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    There are also standard shipping term abbreviations to establish when risk of loss passes under a contact of sale such as FOB. en.wikipedia.org/wiki/FOB_(shipping)
    – ohwilleke
    Oct 20, 2021 at 15:39
  • @bdb484 Thanks for the citation. That’s really interesting. In the e-commerce retail context, there’s not typically an opportunity given, or a willingness on the part of the business, to negotiate terms and/or offer insurance. And yet it seems the great majority of online retailers, small and large, nevertheless take responsibility for actual delivery. It’s surprising. Oct 20, 2021 at 19:26
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The Contract

Who is responsible for loss or damage to goods in transit (as between the parties) is a matter for the parties to determine and agree. The carrier may have liabilities to either or both of the parties under their contract or if they were negligent but that is beside the point.

In B2C transactions, some jurisdictions explicitly place this liability on the seller but the USA is not one of those. In the USA, the seller is only required to refund you if they don't ship - not if the shipment is lost or damaged.

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  • I think this misses the mark, though not by too much. The risk of loss is established by law, although it's true that the parties are free to set their own terms at variance with the statutory default. I've linked to the applicable law in my answer below.
    – bdb484
    Oct 20, 2021 at 13:49
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    "If the seller doesn’t ship your order, it has to give you a full refund". True. But you are saying that's the only situation in which the seller must refund: the linked article doesn't say that. It doesn't address the case of loss during shipping at all. Oct 20, 2021 at 14:01
  • And that entire assertion, supported or not, sort of misses the point of the question, which asks about packages that were, in fact, shipped.
    – bdb484
    Oct 20, 2021 at 17:01

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