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ACCA Applied Skills · Corporate and Business Law (Global) · Obligations of the seller and buyer, and provisions common to both

Alder Ltd (seller) and Brook Inc (buyer) are in different Contracting States and the CISG applies. Their contract does not mention Incoterms or any risk rule and does not require the seller to hand the goods to a particular place. Alder hands the goods to an independent carrier for transport to Brook. When does risk generally pass to Brook?

Risk passes when the goods are handed to the first carrier. Where the contract involves carriage and no particular place of handover is required, the CISG treats handover to the first carrier as the moment risk moves to the buyer, regardless of payment or ownership.

  1. AWhen the goods are handed over to the first carrier for transmission to the buyerCorrect
  2. BWhen the goods are delivered to Brook's premises
  3. CWhen Brook pays the price in full
  4. DWhen property in the goods passes to Brook under the seller's national law

Explanation

Under the CISG, where the contract involves carriage and the seller is not bound to hand over at a particular place, risk passes when the goods are handed to the first carrier. Delivery at the buyer's premises would apply only if agreed. Payment and property transfer are not the CISG tests for risk.

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