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June 25 2018

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52 The Journal of Commerce | June 25 2018 By Colin Barrett Q&A Q A 'Gray' area of liability for this white goods claim I'm looking for your expert opinion on a civil summons we received filed by the consignee on a damaged refrigerator. This item was a "sale" floor model sample with zero hours of service purchased through eBay for $7,499.99. When the damage was initially reported, it was filed for repairs at $5,940.16. The claimant withdrew their claim for repairs and replaced it for the replacement cost stating that those repairs are not possible. First, the initial damage report of $5,940.16 is limited to a visual inspection of the refrigerator. The unit could not be plugged in and tested because damage to both compressors and severance of the copper lines rendered it inoperable. She was advised that additional damage may be discovered aer the refrigerator was powered up. Second, the extensive damage to both compressor units and the structural elements of the refrigerator will likely void the warranty provided by the manufacturer. Because this item was a floor model, she can no longer get the same item at the same price, and the claim was amended to $10,309.00 for the same unit sold by a different retailer. I've done some digging and could not find the same item for a lesser amount. It seems this particular style runs around $10,000. What are we truly liable for, the initial sale price of $7,499.99 or the replacement cost of $10,309.00? I'D VOTE FOR the initial sale price but not the replace- ment cost, all things considered. But I have to tell you that a court might not agree; the law's not totally clear about this sort of situation. What the law does say is that a claimant should "be made whole by receiving the proper money equivalent for what he has actually lost, or, in other words, to restore him to the position he would have occupied, had the carrier performed its contract" — to wit, delivered the goods in undamaged condition. See A. C. L. Ry. Co. v. Roe, 118 So. 155, and see also the US Supreme Court in Hicks v. Guinness, 269 U.S. 71 (1925) ("[T]he loss for which the [claimant] is entitled to be indemnified is … what the [claimant] would have had if the contract had been performed"). Well, what your client "actually lost" was the fancy icebox she'd picked up on eBay for what was apparently a bargain price. On the other hand, she'd never used the icebox; evidently, she'd never even seen it. Yeah, it was advertised as having zero hours of service and being, I'm sure, in pristine condition. Still, with all due respect to those in the advertising business, not all ads are 100 percent truthful. I have to ask, as would, I think, a court, why this good-as-new refrigerator was being auctioned off for nearly $3,000 less than its actual sale price? Is it possible that the unit had a flaw or two undisclosed by the seller? Was, in fact, the manufacturer's warranty still good on this "floor model?" And so on. To be sure, this is a little speculative. But so, too, is the buyer's presumption that it was in perfect shape. So, the situation isn't as clear as anybody would like. Now, as I say, if this came to a court trial, the decision might go the other way. The claimant appears to be an individual woman who's likely to attract great sympathy from a jury versus the far-less-sympathetic carrier who damaged her valued icebox; and I'm also not immune to her plight. However, I'm also not impressed by the claimant's rather cavalier dismissal of repair options. There's obviously a strong case for declaring this unit to be a total loss in the circumstances you've described, and this alone doesn't sway me and certainly doesn't seem to me seriously arguable if we're talking about the difference between $6,000 or so and her purchase price of $7,500. But the gap between $6,000 and the $10,309 that she's now asking is considerably greater. If she's held to $7,500 recovery for her loss, might she reconsider the repair alternative? I have to think that's a possibility, and for that reason I think your proper course of action would be to offer her just her purchase price, which covers the repair estimate plus a nice little lagniappe to compensate her for the inconve- nience and possible loss of warranty, and tell her she'll have to go to court if she wants the extra $3,000 or so she'll need for a new unit. I doubt she'll take you up on the invitation to sue. JOC Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843 559 1277; email Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010. With all due respect to those in the advertising business, not all ads are 100 percent truthful.

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