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CA Foundation · Business Laws · The Sale of Goods Act, 1930

Sanjay sells a specific old printing machine to Dilip for Rs 60,000. The contract says the machine will be sold 'as it stands' once Sanjay has cleaned and repaired it, which Sanjay has not yet done. Dilip has already paid the price. Before the repairs are done, the machine is damaged by lightning while in Sanjay's workshop without fault of either party. Who bears the loss?

Sanjay bears the loss. The seller had still to repair the machine to put it in a deliverable state, so property had not passed to Dilip. Risk follows ownership, and early payment does not transfer the property.

  1. ADilip, because he has paid the price
  2. BSanjay, because property has not passed to DilipCorrect
  3. CBoth equally, because the damage is accidental
  4. DDilip, because the contract is for specific goods

Explanation

Where the seller must do something to put specific goods into a deliverable state, property does not pass until it is done and the buyer has notice. Repairs were pending, so property remained with Sanjay. Risk follows property, so Sanjay bears the loss; payment of the price does not change this.

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