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

Sharma Traders sold a machine to Kiran Works and the property in it passed to Kiran Works on 1 March. Kiran Works asked the seller to keep the machine in its godown until 20 March, and the seller did so without fault. On 10 March the machine was destroyed by a fire that was not caused by anyone's fault. Who bears the loss, there being no contrary agreement?

Kiran Works bears the loss. Once property in the goods passes to the buyer, the goods are at the buyer's risk whether or not delivery has been made, and the seller was not at fault in the delay. So the fire loss falls on the buyer.

  1. AKiran Works, because property had passed even though delivery was not madeCorrect
  2. BSharma Traders, because delivery had not been made
  3. CBoth parties equally, because the machine was in the seller's godown
  4. DNeither party, because the contract is avoided automatically

Explanation

Under Section 26, once the property is transferred to the buyer the goods are at the buyer's risk whether delivery has been made or not. The delay was at the buyer's request and the seller was not at fault, so the seller is not liable. Section 8 does not apply because the risk had already passed.

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