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CMA Foundation · Fundamentals of Business Laws and Business Communication · Sale of Goods Act, 1930

Gupta Brothers contracted on 5 March to sell a specific consignment of 200 bags of basmati rice stored in a godown. Unknown to the seller, the whole consignment had been destroyed in a flood on 3 March. The contract is:

The contract is void. Under Section 7, where specific goods have, without the seller's knowledge, already perished or been so damaged as no longer to match their description when the contract was made, the contract is void from the beginning.

  1. AValid, and the seller must pay damages only
  2. BVoidable at the buyer's option
  3. CVoid, because the goods had perished at the time the contract was madeCorrect
  4. DValid, but the price is reduced proportionately

Explanation

Section 7 says a contract for sale of specific goods is void if, without the seller's knowledge, the goods had perished at the time the contract was made. The flood occurred before the contract, so the contract is void from the start. Section 8 applies only to perishing after an agreement.

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