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

Dinesh, in Pune, sold 500 kg of spices to Ejaz, in Chennai. Dinesh handed the goods to a carrier for transmission without informing Ejaz that sea risk insurance was needed, though the goods were sent by a sea route. The goods were lost at sea. Which statement is correct under the Act?

When goods are sent by a sea route, the seller must give the buyer enough notice to arrange insurance. Dinesh failed to do so, so the goods are treated as at his risk during the sea transit. Ejaz therefore does not bear the loss.

  1. ADinesh must give Ejaz enough notice to insure, and if he does not, the goods are at Dinesh's risk during the sea transitCorrect
  2. BThe loss falls on Ejaz because delivery to a carrier is delivery to the buyer in all cases
  3. CThe loss is shared equally by both parties
  4. DThe contract becomes void since the goods perished

Explanation

Where goods are sent by sea and the seller fails to give the buyer such notice as enables him to insure, the goods are at the seller's risk during the sea transit. The general rule that delivery to a carrier counts as delivery to the buyer is subject to this exception. So Dinesh bears the loss.

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