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

Ravi Agro agrees to sell to Kiran Mills 500 kg of a particular lot of wheat stored in Ravi's warehouse. Unknown to Ravi, the entire lot had been destroyed by fire the previous night, before the contract was made. What is the legal position under Section 7?

The contract is void. Under Section 7, where specific goods have, without the seller's knowledge, perished or become so damaged as no longer to answer their description at the time the contract was made, the contract of sale is void from the start.

  1. AThe contract is valid and Ravi must pay damages
  2. BThe contract is voidable at Kiran's option
  3. CThe contract is voidCorrect
  4. DThe contract is valid but performance is postponed

Explanation

Section 7 says that where there is a contract for sale of specific goods and the goods, without the seller's knowledge, have perished at the time the contract was made, the contract is void. Here the lot was already destroyed and Ravi did not know, so the contract is void, not voidable.

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