| Course | AC502 Business Law for Accountants |
|---|---|
| Unit | Unit 5 |
| Paper type | Sales contract analysis |
| Length | About 580 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | MS in Accounting |
| Updated | October 2026 |
Free sample paper for AC502 Unit 5
Forty Ice Machines, Six Wrong, One Overturned Trailer: A Unit 5 Sales Contract Analysis of Risk of Loss
[Student Name]
Purdue University Global
AC502: Business Law for Accountants
Unit 5 Sales Contract Analysis
[Instructor Name]
[Date]
The manufacturer, the wholesaler, the carrier and every figure are composite; the code sections and textbook cited are real; this is coursework analysis, not legal advice.
Key Terms and Timeline
The purchase order covers forty undercounter ice machines at 115 volts, $2,150 each, $86,000 in all, shipped FOB the manufacturer's plant by a carrier the manufacturer selects, with payment due thirty days after delivery.
1. December 30: the plant loads forty units. Six are 208-volt models, which will not run on the wholesaler's customers' standard circuits.
2. December 31: the trailer overturns on the interstate. Every unit is destroyed.
3. January 4: the manufacturer invoices $86,000.
The Default Rule for Shipment Contracts
FOB the seller's plant makes this a shipment contract: the seller must put the goods in the carrier's possession and make a reasonable contract for their transport, and its delivery duty ends there (U.C.C. § 2-319). When a contract requires or authorizes the seller to ship by carrier and does not require delivery at a particular destination, the buyer takes the risk once the goods are duly handed to the carrier (U.C.C. § 2-509). Read alone, that rule puts the whole loss on the wholesaler from December 30.
The Effect of a Nonconforming Tender
The word duly matters, and so does the next section. Where a tender or delivery of goods so fails to conform to the contract as to give a right of rejection, the risk of loss remains on the seller until cure or acceptance (U.C.C. § 2-510). Six of forty units were the wrong voltage. Article 2 lets a buyer turn away goods that miss the contract in any respect, and wrong electrical specifications are not a trivial defect for equipment sold to restaurants. The shipment as a whole gave the wholesaler a right to reject.
A shipping term tells you when risk would pass if the seller performed, but it cannot move risk for goods the seller never properly tendered, so the defective units keep the loss with the manufacturer.
Applying Both Sections
Because the tender gave a right of rejection, risk stayed with the manufacturer. The wholesaler never accepted and had no chance to, and the manufacturer could not cure before the trailer overturned. The whole $86,000 loss falls on the manufacturer, which should claim against the carrier and its own insurer. A narrower reading, that risk passed for the 34 conforming units and stayed only for the six, has some support where goods are separable; the stronger view, given a single shipment that could be rejected as a whole, is that risk did not pass for any of it.
Title Versus Risk
Title is a separate question. In a shipment contract, title generally passes when the seller completes physical delivery to the carrier (U.C.C. § 2-401), and a buyer's rejection revests title in the seller. Title does not decide risk, so neither company's loss turns on who held title on December 31.
The Casualty Loss at December 31
The manufacturer carries the loss. It should remove the units from inventory, recognize a casualty loss of $86,000 at cost or carrying amount, offset by any insurance or carrier recovery that is probable, and not record revenue. The wholesaler records no purchase and no payable (Clarkson et al., 2021).
References
Clarkson, K. W., Miller, R. L., & Cross, F. B. (2021). Business law: Text and cases (15th ed.). Cengage.
U.C.C. § 2-319 (Am. L. Inst. & Unif. L. Comm'n 2002).
U.C.C. § 2-401 (Am. L. Inst. & Unif. L. Comm'n 2002).
U.C.C. § 2-509 (Am. L. Inst. & Unif. L. Comm'n 2002).
U.C.C. § 2-510 (Am. L. Inst. & Unif. L. Comm'n 2002).
AC502 Unit 5 instructions, in plain terms
The fifth AC502 unit asks you to analyze a sales contract problem involving delivery and loss. Set out the key terms of the order and a short timeline. Classify the contract as a shipment or destination contract from its delivery term. Apply the default risk of loss rule for that type of contract. Then ask whether the seller's tender conformed, and if it did not, apply the rule that keeps risk with a seller whose tender gives a right of rejection. Address whether risk could pass for part of a shipment. Separate title from risk and explain why title does not decide the loss. Close with the accounting consequence for each party at the reporting date. List the Article 2 provisions you relied on and the assigned textbook as APA 7 references.
How the AC 502 Unit 5 example is put together
The sample states the order's terms, forty undercounter machines at $2,150 each, FOB the manufacturer's plant, and a three-entry timeline. The default rule section classifies a shipment contract under section 2-319 and applies section 2-509. The nonconforming tender section explains that six wrong-voltage units gave the wholesaler a right to reject, so section 2-510 kept risk with the manufacturer. The highlighted sentence reconciles the two sections. A section weighs whether risk passed for the 34 conforming units and prefers the view that it did not. Title is separated from risk under section 2-401, and the closing section books the $86,000 casualty loss on the manufacturer's side. Each step cites the section it relies on, letting anyone test each conclusion against the statute.
Reading the AC502 Unit 5 grading rubric
Risk of loss analyses in AC502 earn points for applying the default rule correctly and then recognizing when a breach changes it. Graders check the classification of the contract, the default rule and the effect of a nonconforming tender. The rubric rewards students who address partial conformity rather than ignoring it, and who separate title from risk. Connecting the legal result to each party's books at the reporting date shows the integration an accounting law course expects. Answers that stop at the FOB term, or that let title decide risk, lose substantial credit. A clear timeline and APA 7 citations to the code sections support the analysis.
AC502 Unit 5 help from the desk
The most common Unit 5 mistake is deciding the case on the FOB term alone. Students apply section 2-509 and stop before section 2-510. The significance of six nonconforming units is dismissed as minor without considering the perfect tender rule. Title and risk are treated as the same question. Partial shipment arguments are ignored. The accounting effect is missing or assigned to the wrong company. If your section's facts involve a destination contract, a bailee or a buyer's breach, our writers can work through the right sections for that scenario. Some students also forget that the carrier may owe the manufacturer for the loss, which affects the size of the casualty loss the manufacturer finally records. A strong answer mentions that recovery and treats it as an offset only when it is probable.
Get an AC502 Unit 5 example written to your instructions
Describe the Unit 5 transaction, its delivery term, what shipped and what went wrong, and add the rubric. The analysis classifies the contract, tests conformity and settles who carried the risk at the moment of loss, reaching you in 24-48h. The first custom sample is free, and the wholesaler and manufacturer in it are made up. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
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AC502 Unit 5 questions, answered
Why does a buyer-side delivery term leave the loss with the seller?
Because the term governs conforming goods. Section 2-510 overrides the ordinary shipment rule when the seller's tender gives the buyer a right to reject, keeping the risk on the seller until cure or acceptance. Six wrong-voltage machines gave that right here. The example states the default rule first, then shows exactly where the nonconformity displaces it.
Would the answer differ if only one machine were miswired?
Under the perfect tender rule, probably not, since a single-delivery contract permits rejection for any nonconformity, subject to good faith and the seller's right to cure. In an installment contract the buyer would need substantial impairment. The example notes that contrast in a sentence, because scenarios in this unit sometimes split one delivery into several.
Does FOB mean the same thing under Incoterms?
Not exactly. The Incoterms FOB rule is a maritime term tied to loading goods on board a vessel, while the code's FOB shipping point covers delivery to any carrier. Contracts sometimes mix the two. The example applies the code because the order cites no Incoterms rule, and it flags that a contract adopting Incoterms would be read under those definitions.
Where can I find a free AC502 Unit 5 sample paper?
This page holds a full AC502 Unit 5 sales contract analysis of forty ice machines destroyed in transit after a partly nonconforming shipment, applying sections 2-509 and 2-510, separating title from risk, with APA 7 references.
What accounting entry follows from the analysis?
The manufacturer keeps the loss, so it removes the units from inventory, recognizes an $86,000 casualty loss less any probable carrier or insurance recovery, and records no sale. The wholesaler records no purchase and no payable.