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

Rao agreed to sell a specific second-hand lorry to Iqbal. Before the risk passed to Iqbal, and without fault of either party, the lorry was completely destroyed by a flood. What is the effect under the Sale of Goods Act, 1930?

The agreement is avoided. Under Section 8, where specific goods perish without fault of seller or buyer after an agreement to sell but before the risk passes to the buyer, the agreement is avoided automatically and neither party must perform.

  1. AThe agreement is avoidedCorrect
  2. BRao must supply a similar lorry
  3. CIqbal must pay the price in full
  4. DRao is liable to pay damages to Iqbal

Explanation

Section 8 provides that where specific goods in an agreement to sell perish without fault of either party before the risk passes to the buyer, the agreement is thereby avoided. Neither party is bound to perform, so price and damages claims fail.

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