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CSEET · Business Laws and Management · Elements of Law relating to Sale of Goods

Ramesh agrees to sell to Sunita a specific lot of 50 bags of basmati rice lying in his godown. Before the risk passes to Sunita, a flood destroys the entire lot without any fault of either party. What is the effect on the agreement to sell?

The agreement is avoided. Under Section 8, when specific goods perish without fault of either party after an agreement to sell but before the risk passes to the buyer, the agreement is thereby avoided, so neither party can enforce it.

  1. AThe agreement is avoidedCorrect
  2. BRamesh must deliver similar rice from the market
  3. CSunita must pay the price since the contract was made
  4. DThe agreement continues until Sunita decides to cancel it

Explanation

Section 8 says that where there is an agreement to sell specific goods and the goods perish without fault of seller or buyer before the risk passes to the buyer, the agreement is avoided. The lot is specific, so substitute goods cannot be demanded. The payment of the price is not required.

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