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CA Foundation · Business Laws · The Sale of Goods Act, 1930

Bhavna Mills agrees to sell Dinesh 300 bags of cement 'out of the 1,000 bags lying in Godown A'. The next day, before any bags are set apart, 800 bags in the godown are destroyed by flood, leaving 200 bags. Neither party was at fault. What is the position?

The agreement is avoided. Goods were never set apart, so property and risk had not passed, and the unascertained goods are treated as specific. Their perishing without fault of either party before risk passes avoids the agreement to sell, so Bhavna need not buy elsewhere.

  1. AThe agreement is avoided because the goods have perishedCorrect
  2. BBhavna must still deliver 300 bags from other sources
  3. CDinesh must accept 200 bags and pay in full
  4. DProperty has passed to Dinesh in 300 bags, so he bears the loss

Explanation

The goods are unascertained, being part of a larger stock. This is an agreement to sell, because no goods were set apart. Where specific goods perish without fault of either party before the risk passes, the agreement is avoided. Bhavna cannot be made to buy other goods, and no property passed to Dinesh.

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