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

Mehta Exports agreed to sell 100 specific bags of tea to Nair & Co. for delivery at Nair's premises in another city, the seller agreeing to deliver at his own risk. During the journey the tea deteriorated slightly through natural moisture changes necessarily incident to transit. There is no contrary agreement. Who bears the loss from this deterioration?

Nair & Co., the buyer, bears it. Even where the seller delivers at his own risk at a distant place, Section 40 says the buyer takes the risk of deterioration necessarily incident to the course of transit, unless otherwise agreed.

  1. ANair & Co., the buyerCorrect
  2. BMehta Exports, because delivery was at its risk
  3. CBoth equally
  4. DThe carrier, by operation of the Act

Explanation

Section 40 provides that where the seller agrees to deliver at his own risk at a different place, the buyer shall, unless otherwise agreed, still take the risk of deterioration necessarily incident to the course of transit. The seller's own risk covers other losses, but not this natural deterioration.

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